A fast-acting brake on a fast-turning lathe is estimated to save seven seconds per piece produced since the operator (paid at a rate of $15/hour) does not have to wait as long for the lathe to stop. 40,000 pieces are produced annually. Assuming a three-year life, no salvage value, and an 8% interest rate, what should be the maximum purchase price of the brake?
A fast-acting brake on a fast-turning lathe is estimated to save seven seconds per piece produced since the operator (paid at a rate of $15/hour) does not have to wait as long for the lathe to stop. 40,000 pieces are produced annually. Assuming a three-year life, no salvage value, and an 8% interest rate, what should be the maximum purchase price of the brake?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A fast-acting brake on a fast-turning lathe is estimated to save seven seconds per piece produced since the operator (paid at a rate of $15/hour) does not have to wait as long for the lathe to stop. 40,000 pieces are produced annually. Assuming a three-year life, no salvage value, and an 8% interest rate, what should be the maximum purchase price of the brake?
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