3. A supermarket chain buys loaves of bread from its supplier at $0.50 per loaf. The chain is considering two options to bake its own bread. Machine A Machine B Capital investment Useful life (years) Annual fixed cost $8,000 $16,000 7 7 $2,000 $4,000 Variable cost per loaf $0.26 $0.16 Neither machine has a market value at the end of seven years, and MARR is 12% per year. b. What is the minimum number of loaves that must be sold per year to justify installing Machine B instead of buying the loaves from the supplier?

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3. A supermarket chain buys loaves of bread from its supplier at $0.50 per loaf. The chain is
considering two options to bake its own bread.
Machine A Machine B
Capital investment
Useful life (years)
$8,000
$16,000
7
7
Annual fixed cost
$2,000
$4,000
$0.16
Variable cost per loaf
$0.26
Neither machine has a market value at the end of seven years, and MARR is 12% per year.
b. What is the minimum number of loaves that must be sold per year to justify installing
Machine B instead of buying the loaves from the supplier?
Transcribed Image Text:3. A supermarket chain buys loaves of bread from its supplier at $0.50 per loaf. The chain is considering two options to bake its own bread. Machine A Machine B Capital investment Useful life (years) $8,000 $16,000 7 7 Annual fixed cost $2,000 $4,000 $0.16 Variable cost per loaf $0.26 Neither machine has a market value at the end of seven years, and MARR is 12% per year. b. What is the minimum number of loaves that must be sold per year to justify installing Machine B instead of buying the loaves from the supplier?
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