A large city in the midwest needs to acquire a street-cleanıng machine to keep its roads looking nice year round A used cleaning vehicle will cost $75,000 and have a $20,000 market (salvage) value at the end of its five-year Iife. A new system with advanced features will cost $150,000 and have a $50,000 market value at the end of its five-year life. The new system is expected to reduce labor hours compared with the used system. Current street-cleaning activity requires the used system to operate 8 hours per day for 20 days per month Labor costs $40 per hour (including fringe benefits), and MARR is 12% per year compounded monthly a. Find the breakeven percent reduction in labor hours for the new system b. If the new system is expected to be able to reduce labor hours by 20% compared with the used system, which machine should the city purchase? a. The breakeven reduction in lebor hours for the new system is ________%
A large city in the midwest needs to acquire a street-cleanıng machine to keep its roads looking nice year round A used cleaning vehicle will cost $75,000 and have a $20,000 market (salvage) value at the end of its five-year Iife. A new system with advanced features will cost $150,000 and have a $50,000 market value at the end of its five-year life. The new system is expected to reduce labor hours compared with the used system. Current street-cleaning activity requires the used system to operate 8 hours per day for 20 days per month Labor costs $40 per hour (including fringe benefits), and MARR is 12% per year compounded monthly a. Find the breakeven percent reduction in labor hours for the new system b. If the new system is expected to be able to reduce labor hours by 20% compared with the used system, which machine should the city purchase? a. The breakeven reduction in lebor hours for the new system is ________%
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 30P: Mallette Manufacturing, Inc., produces washing machines, dryers, and dishwashers. Because of...
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A large city in the midwest needs to acquire a street-cleanıng machine to keep its roads looking nice year round A used cleaning vehicle will cost $75,000 and have a $20,000 market (salvage) value at the end of its five-year Iife. A new system with advanced features will cost $150,000 and have a $50,000 market value at the end of its five-year life. The new system is expected to reduce labor hours compared with the used system. Current street-cleaning activity requires the used system to operate 8 hours per day for 20 days per month Labor costs $40 per hour (including fringe benefits ), and MARR is 12% per year compounded monthly
a. Find the breakeven percent reduction in labor hours for the new system
b. If the new system is expected to be able to reduce labor hours by 20% compared with the used system, which machine should the city purchase?
a. The breakeven reduction in lebor hours for the new system is ________% (Round to one decimal place)
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