A company is planning to install a new automated plastic- molding press. Two different presses are available. Information for these two mutually exclusive alternatives are as follows: Press 1 Press 2 Investment cost Annual expenses $25,192 Reject rate $49,600 ??? $22,880 2.6% 5.6% Both presses are capable of producing 120,000 units per year. Non-defective units are sold for $0.375/unit (rejected units are worthless); the selected analysis period is five years; and the MARR = 10%. Find the breakeven investment cost of Press 2.
A company is planning to install a new automated plastic- molding press. Two different presses are available. Information for these two mutually exclusive alternatives are as follows: Press 1 Press 2 Investment cost Annual expenses $25,192 Reject rate $49,600 ??? $22,880 2.6% 5.6% Both presses are capable of producing 120,000 units per year. Non-defective units are sold for $0.375/unit (rejected units are worthless); the selected analysis period is five years; and the MARR = 10%. Find the breakeven investment cost of Press 2.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![A company is planning to install a new automated plastic-
molding press. Two different presses are available. Information
for these two mutually exclusive alternatives are as follows:
Press 1
Press 2
Investment cost
$49,600
???
Annual expenses
$25,192
$22,880
Reject rate
2.6%
5.6%
Both presses are capable of producing 120,000 units per year.
Non-defective units are sold for $0.375/unit (rejected units are
worthless); the selected analysis period is five years; and the
MARR = 10%. Find the breakeven investment cost of Press 2.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F549d239c-3a08-4563-a8f6-b92b5f9f8447%2F221c5efe-4435-4780-8fcf-ec1d12777e4d%2Fllt8dc_processed.png&w=3840&q=75)
Transcribed Image Text:A company is planning to install a new automated plastic-
molding press. Two different presses are available. Information
for these two mutually exclusive alternatives are as follows:
Press 1
Press 2
Investment cost
$49,600
???
Annual expenses
$25,192
$22,880
Reject rate
2.6%
5.6%
Both presses are capable of producing 120,000 units per year.
Non-defective units are sold for $0.375/unit (rejected units are
worthless); the selected analysis period is five years; and the
MARR = 10%. Find the breakeven investment cost of Press 2.
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