A company is considering replacing an old machine with a new machine that will cost $75,000. It will reduce operating expenses by $7,500 per year compared to the old machine. They expect to sell the new machine at the end of 5 years for $60,000. Alternatively, the old machine could be repaired in order to extend its useful life for five more years. The old machine can be sold today for $5,000, but it will have no resale value 5 years from now. How much can the company justify spending to repair the old machine? Assume MARR = 10% with no inflation. b. $4500 c. $5500 a. $3500 d. $6500 e. $7500

A company is considering replacing an old machine with a new machine that will cost $75,000. It will reduce operating expenses by $7,500 per year compared to the old machine. They expect to sell the new machine at the end of 5 years for $60,000. Alternatively, the old machine could be repaired in order to extend its useful life for five more years. The old machine can be sold today for $5,000, but it will have no resale value 5 years from now. How much can the company justify spending to repair the old machine? Assume MARR = 10% with no inflation. b. $4500 c. $5500 a. $3500 d. $6500 e. $7500

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Write the advantages and disadvantages of Cost benefits.
Could you provide some graphs on the above?
Average fixed cost is $22 and output is 12 units Calculate total fixed cost
How did you get the productivity of the new unit. What formula is used?
Total cost and output are $3000 and 60 respectively Calculate average cost
Storage management over the cloud is known as: Infrastructure as a service Platform as a service Software as a service None of the answers
How do we calculate the total amount of pagecant costs, price profit, profit make up and selling costs
Bags/Participants Fixed Cost Variable Cost Total Cost 0 $1,700 $ - $1,700 100 $1,700 $500 $2,200 200 $1,700 $1,200 $2,900 300 $1,700 $2,700 $4,400 400 $1,700 $5,200 $6,900 500 $1,700 $9,000 $10,700 600 $1,700 $15,000 $16,700 700 $1,700 $23,800 $25,500 800 $1,700 $36,800 $38,500 900 $1,700 $55,800 $57,500 1,000 $1,700 $83,000 $84,700 Given the above information on cost, if you charge $15 per entry, what is the breakeven quantity of bags that you should order? At what quantity of bags will profits be maximized? A Use the profit maximizing rule, MR ≥ MC, buy 300 bags. B Use the profit maximizing rule, MR ≥ MC, buy 200 bags. C Use Qb = F/(MR-AVC) where Qb is the breakeven quantity to be determined, the optimal quantity of bags is 300. D Use Qb = F/(MR-AVC) where Qb is the breakeven quantity to be determined, the optimal quantity of bags is 200.
Billco had a total cost of $10,000 when it sold 200 units. It had a total cost of $14,000 when it sold 250 units. What was Billco's average total cost when it sold 250 units?
Imagine a smartphone company has the following costs when they produce 200 phones: $50 in average fixed cost and $140 in average total cost. What would be the total variable cost for this company when they produce 200 phones? Type your numeric answer and submit
Mircoeconomics production and cost concept: Several years ago, hurricane Gilbert destroyed thousands of acres of banana in Jamaica. Farmers whose crops were destroyed by the hurricane were much worse off, but farmers whose crops were not destroyed benefited from the hurricane. Why did this occur? What information would you need about the market for bananas in order to assess whether farmers as a group were hurt or helped by the floods?
Evaluate the costs and benefits associated with achieving ISO 9000/9001 certification status for a specific product- or service-based company.