Your boss has told you to evaluate two ovens for Tink-the-Tinkers, a gourmet sandwich shop. After some questioning of vendors and receipt of specifications, you
1. The life of each machine is 5 years.
2. The company thinks it knows how to make 14% on investments no more risky than this one.
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(a) Determine via the present value method which machine to tell your boss to purchase.
(b) What assumption are you making about the ovens?
(c) What assumption s are you making in yourmethodology?
Three Small Ovens at $1,250 Each Two Large Ovens at $2,500 Each $3,750 $5,000 Original cost Labor per year in excess of larger models $750 (total) Cleaning/ maintenance 750 ($250 each) $400 ($200 each) Salvage value 750 ($250 cach $1,000 ($500 each)
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Authors: Jay Heizer, Barry Render
10th edition
978-0136119418, 136119417, 978-0132163927
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