A chain cafeteria business is in the process of forming a separate business unit that provides meals to facilities for the elderly, such as assisted care and long-term care centers. Since the meals are prepared in one central location and distributed by trucks throughout the city, the equipment that keeps food and drink cold and hot is very important. The general manager wishes to choose between two temperature retention units ((H) and (IC)) that are mobile and easy to sterilize after each use. Use the cost estimates below to select the more economic unit at a MARR of 8% per year by utilizing the Annual Equivalent Worth Analysis
A chain cafeteria business is in the process of forming a separate business unit that provides meals to facilities for the elderly, such as assisted care and long-term care centers. Since the meals are prepared in one central location and distributed by trucks throughout the city, the equipment that keeps food and drink cold and hot is very important. The general manager wishes to choose between two temperature retention units ((H) and (IC)) that are mobile and easy to sterilize after each use. Use the cost estimates below to select the more economic unit at a MARR of 8% per year by utilizing the Annual Equivalent Worth Analysis
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A chain cafeteria business is in the process of forming a separate business unit that
provides meals to facilities for the elderly, such as assisted care and long-term care centers. Since the
meals are prepared in one central location and distributed by trucks throughout the city, the equipment
that keeps food and drink cold and hot is very important. The general manager wishes to choose
between two temperature retention units ((H) and (IC)) that are mobile and easy to sterilize after each
use. Use the cost estimates below to select the more economic unit at a MARR of 8% per year by
utilizing the Annual Equivalent Worth Analysis
Transcribed Image Text:(H)
-15 000
(IC)
-20 000
Initial Investment cost (pbr)
Annual Cost (Pbr/year)
Refurbishment Cost (pbr)
-6000
-9000
-2000 every 4 years
(i.e. at year 4 and at year 8)
8000
Salvage Value (Pbr)
Useful Life (year)
3000
4
12
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