A new manufacturing facility will produce two products, each of which requires a drilling operation during processing. Two alternative types of drilling machines (D1 and D2) are being considered for purchase. One of these machines must be selected. For the same annual demand, the annual production requirements (machine hours) and the annual operating expenses (per machine) are listed in the table below. Which machine should be selected if the MARR is 15% per year? Assumptions: The facility will operate 2,250 hours per year. Machine availability is 80% for Machine D1 and 75% for Machine D2. The yield of D1 is 90%, and the yield of D2 is 80%. Annual operating expenses are based on an assumed operation of 2,250 hours per year, and workers are paid during any idle time of Machine D1 or Machine D2. Assume repeatability. Click the icon to view the alternatives description. Click the icon to view the interest and annuity table for discrete compounding when i = 15% per year. The total equivalent annual cost of owning a required number of machines D1 is $ The total equivalent annual cost of owning a required number of machines D2 is $ Which machine should be selected? Choose the correct answer below. O D2 ... (Round to the nearest hundreds.) (Round to the nearest hundreds.)
A new manufacturing facility will produce two products, each of which requires a drilling operation during processing. Two alternative types of drilling machines (D1 and D2) are being considered for purchase. One of these machines must be selected. For the same annual demand, the annual production requirements (machine hours) and the annual operating expenses (per machine) are listed in the table below. Which machine should be selected if the MARR is 15% per year? Assumptions: The facility will operate 2,250 hours per year. Machine availability is 80% for Machine D1 and 75% for Machine D2. The yield of D1 is 90%, and the yield of D2 is 80%. Annual operating expenses are based on an assumed operation of 2,250 hours per year, and workers are paid during any idle time of Machine D1 or Machine D2. Assume repeatability. Click the icon to view the alternatives description. Click the icon to view the interest and annuity table for discrete compounding when i = 15% per year. The total equivalent annual cost of owning a required number of machines D1 is $ The total equivalent annual cost of owning a required number of machines D2 is $ Which machine should be selected? Choose the correct answer below. O D2 ... (Round to the nearest hundreds.) (Round to the nearest hundreds.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:A new manufacturing facility will produce two products, each of which requires a drilling operation during processing. Two alternative types of drilling machines (D1 and D2) are being
considered for purchase. One of these machines must be selected. For the same annual demand, the annual production requirements (machine hours) and the annual operating
expenses (per machine) are listed in the table below. Which machine should be selected if the MARR is 15% per year? Assumptions: The facility will operate 2,250 hours per year.
Machine availability is 80% for Machine D1 and 75% for Machine D2. The yield of D1 is 90%, and the yield of D2 is 80%. Annual operating expenses are based on an assumed
operation of 2,250 hours per year, and workers are paid during any idle time of Machine D1 or Machine D2. Assume repeatability.
Click the icon to view the alternatives description.
Click the icon to view the interest and annuity table for discrete compounding when i = 15% per year.
The total equivalent annual cost of owning a required number of machines D1 is $
The total equivalent annual cost of owning a required number of machines D2 is $
Which machine should be selected? Choose the correct answer below.
D2
D1
(Round to the nearest hundreds.)
(Round to the nearest hundreds.)
Transcribed Image Text:R-43
T-22
Product
Capital investment
Useful life
Annual expenses
Market value
Machine D1
2,250 hours
1,200 hours
3,450 hours
15,000/machine
six years
5,000/machine
2,500/machine
Machine D2
800 hours
1,550 hours
2,350 hours
25,000/machine
eight years
7,000/machine
3,500/machine
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