Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

RC Sport is considering producing the goal frame in its existing facility, instead of buying it from an external supplier. In order to make the

RC Sport is considering producing the goal frame in its existing facility, instead of buying it from an external supplier. In order to make the goal frames, it would need to buy a new machine. The machine would be expected to last 7 years, and sold for $8,000 at the end of year 7. Its annual maintenance and operating cost would be $50,000. RC would also need to buy $30 worth of material to produce each goal frame. The padding and netting would continue to be purchased from the same external supplier for the same price, and it would still cost $5 in labor cost to assemble one goal. Assuming RC Sport is able to produce and sell 10,000 hockey goals annually, what is the maximum purchase price of the machine that would make it economical for RC Sport to make the hockey goal frames internally? Use the annual worth method, assuming 15% MARR, and the Excel Goal Seek function to find the answer. Please make sure you save your Excel file after running Goal Seek, so that I can verify your file to make sure that you did use the Goal Seek function to arrive at your answer. (Do not use the trial and error, or another method.) Provide a written statement indicating the maximum economical price of the machine. Note: You will need to make up a purchase price of the machine to start with, which you can then override with the Goal Seek function.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Markets And Institutions

Authors: Jeff Madura

9th Edition

1439038848, 978-1439038840

More Books

Students also viewed these Finance questions