A machine that produces a certain piece must be turned off by the operator after each piece is completed. T machine "coasts" for 15 seconds after it is turned off, thus preventing the operator from removing the piece quickly before producing the next piece. An engineer has suggested installing a brake that would reduce the coasting time to 3 seconds. The machine produces 50,000 pieces a year. The time to produce one piece is 1 minute 45 seconds, excludi coasting time. The operator earns $12 an hour and direct costs for operation are $2 an hour. The direct cost are incurred whenever the operator has to work. The brake will require servicing every 594 hours of machin operation. It will take the operator 30 minutes to perform the necessary maintenance and will require $42 in parts and materials. The brake is expected to last 7,500 hours of operation (with proper maintenance) and w have no salvage value. How much could be spent for the brake if the Minimum Attractive Rate of Return is 10% compounded
A machine that produces a certain piece must be turned off by the operator after each piece is completed. T machine "coasts" for 15 seconds after it is turned off, thus preventing the operator from removing the piece quickly before producing the next piece. An engineer has suggested installing a brake that would reduce the coasting time to 3 seconds. The machine produces 50,000 pieces a year. The time to produce one piece is 1 minute 45 seconds, excludi coasting time. The operator earns $12 an hour and direct costs for operation are $2 an hour. The direct cost are incurred whenever the operator has to work. The brake will require servicing every 594 hours of machin operation. It will take the operator 30 minutes to perform the necessary maintenance and will require $42 in parts and materials. The brake is expected to last 7,500 hours of operation (with proper maintenance) and w have no salvage value. How much could be spent for the brake if the Minimum Attractive Rate of Return is 10% compounded
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
Related questions
Question
Transcribed Image Text:A machine that produces a certain piece must be turned off by the operator after each piece is completed. The
machine "coasts" for 15 seconds after it is turned off, thus preventing the operator from removing the piece
quickly before producing the next piece. An engineer has suggested installing a brake that would reduce the
coasting time to 3 seconds.
The machine produces 50,000 pieces a year. The time to produce one piece is 1 minute 45 seconds, excluding
coasting time. The operator earns $12 an hour and direct costs for operation are $2 an hour. The direct costs
are incurred whenever the operator has to work. The brake will require servicing every 594 hours of machine
operation. It will take the operator 30 minutes to perform the necessary maintenance and will require $42 in
parts and materials. The brake is expected to last 7,500 hours of operation (with proper maintenance) and will
have no salvage value.
How much could be spent for the brake if the Minimum Attractive Rate of Return is 10% compounded
annually?
Enter your answer in this format: 1234.56
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education