Question
Cedar Shakes is a business that produces various cedar coating materials for use in homes. In business production has problems with one of the hosts
Cedar Shakes is a business that produces various cedar coating materials for use in homes. In business production
has problems with one of the hosts it uses.
wants to analyze new machine purchase options. Repair of the machine
you will be able to use the machine for another 5 years of work and
maintenance costs will be reduced by 15%. If the new machine is purchased, the new machine
It cost $2.5 million and the business will be able to use the new machine for 10 years. Acquisition of new machines
more efficient production will be done and if two workers employ less than $30,000 per year at the expense of less labor
will be tolerated. In the current state, there are no area issues for operating capacity usage.
Although the new machine will take up less space in operation. Finally, 10% (annual) when new machines are purchased
Electricity costs of $20,000 less and maintenance costs of 25% ($50,000 a year) will be reduced. Old machine
there is no scrap value.
Requested:
a. If the machine is repaired and used, the total annual cost of the machine to the operation will be.
b. If a new machine is purchased, the total annual cost of the new machine will be.
c. How your suggestion will be presented to the business according to your calculations. Explain with reasons.
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