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Baby Doll Shop currently manufactures wooden parts for dollhouses. Its sole worker is paid $8.10 an hour and, using a handsaw, can produce a year's

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Baby Doll Shop currently manufactures wooden parts for dollhouses. Its sole worker is paid $8.10 an hour and, using a handsaw, can produce a year's required production (1, 600 parts) in just eight weeks of 40 hours per week. That is the worker averages five parts per hour when working by hand. The shop is considering the purchase of a power band saw with associated fixtures in order to improve the productivity of this operation. Three models of power saw could be purchased: Model A (economy version), Model B (high-powered version), and Model C (deluxe high-end version). The major operating difference between these models is their speed of operation. The investment costs, including the required fixtures and other operating characteristics, are summarized as follows: Assume that MARR = 10%. Are there enough potential savings to make it economical to purchase any of the power band saws? Which model is most economical according to the rate-of-return principle? (Assume that any effect of income tax has already been considered in the dollar estimates.) (Source: This problem is adapted with the permission of Professor Peter Jackson of Cornell University.)

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