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ACE Corporation requires a chemical finishing process for a product under contract for a period of six years. Three options are available. Neither option 1

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ACE Corporation requires a chemical finishing process for a product under contract for a period of six years. Three options are available. Neither option 1 nor option 2 can be repeated after its process life. However, option 3 will always be available from H & H Chemical Corporation at the same cost during the period that the contract is operative. Here are the options: Process devise A, which costs exist100,000, has annual operating and labor costs of exist60,000 and a useful service life of four years with an estimated salvage value of exist10,000. Process device B, which costs exist150,000, has annual operating and labor costs of exist50,000 and a useful service life of four years with an estimated salvage value of exist10,000 Subcontract out the process at a cost of exist100,000 per year. As an engineering consultant which option would you recommend Ace Corporation if I = 12% and justify your recommendation as a business solution. Discuss the issue relating to comparing and ranking investment alternatives for a business in general and your organization in particular. Give examples from your organization to support the answer. On January 2, 2004, the ABC Flour Company purchased a new machine at a cost of exist82,000. Installation costs for the machine were exist3,000. The machine was expected to have a useful life of 10 years, with a salvage value of exist3,000. The company uses straight-line depreciation for financial reporting. On January 3, 2007, the machine broke down, and an extraordinary repair had to be made to the machine at a cost of exist8,000. The repair extended the machine's life to 13 years, but left the salvage value unchanged. On January 2, 2010, an improvement was made to the machine in the amount of exist5,000 that increased the machine's productivity and increased the salvage value (to exist6,000), but did not affect the remaining useful life. Calculate depreciation expenses every 31^st December for the years 2004, 2007 and 2010 and comment in detail. Discuss the impact of Inflation, Depreciation, Taxes/VAT on the profitability of engineering projects

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