Three models of baseball bats will be manufactured in a new plant in Pulaski. Each bat requires some manufacturing time at either Lathe 1 or Lathe 2, according to the following table. Your task is to help decide which type of lathe to install. The plant will operate 3,250 hours per year. Machine availability is 90% for Lathe 1 and 85% for Lathe 2. Scrap rates for the two lathes are 10% versus 15% forL1 and L2, respectively. Cash flows and expected lives for the two lathes are given in the adjacent table. Assume repeatability.Annual operating expenses are based on an assumed operation of 3,250 hours peryear, and workers are paid during any idle time of L1 and L2. Upper management has decided that MARRequals = 16% per year.

A. How many type L1 lathes will be required to meet the machine-hour requirement?

The number of machines of type L1 that will be needed is ..... (round up to the nearest whole number).

The number of machines of type L1 that will be needed is ..... (round up to the nearest whole number).

B. What is the CR cost of the required type L2 lathes?

The annual cost of ownership for L1 is $......?? (round up to the nearest whole hundreds).

The annual cost of ownership for L2 is $......?? (round up to the nearest whole hundreds).

C. What is the annual operating expense of the type L2 lathes?

The annual expenses for 3 L1 lathes is $.....?? (round up to the nearest whole hundreds).

The annual expenses for 2 L2 lathes is $.....?? (round up to the nearest whole hundreds).

D. Which type of lathe should be selected on the basis of lowest total equivalent annual cost?

The total equivalent cost for L1 is $.....?? (round up to the nearest whole hundreds).

The total equivalent cost for L2 is $.....?? (round up to the nearest whole hundreds).

Which lathe should be chosen? Choose the correct answer below.

Lathe L2 ... or ... Lathe L1