A tool and die company in Hanover is considering the purchase of a drill press with fuzzy - logic software to improve accuracy and reduce tool wear . The company has the opportunity to buy a slightly used machine for $ 15,000 or a new one for $ 21,000 . Because the new machine is a more sophisticated model , its operating cost is expected to be $ 7000 per year , while the used machine is expected to require $ 8200 per year . Each machine is expected to have a 25 - year life with a 5 % salvage value . Using ROR method , calculate which one is more profitable for the company MARR is 10 %.
A tool and die company in Hanover is considering the purchase of a drill press with fuzzy - logic software to improve accuracy and reduce tool wear . The company has the opportunity to buy a slightly used machine for $ 15,000 or a new one for $ 21,000 . Because the new machine is a more sophisticated model , its operating cost is expected to be $ 7000 per year , while the used machine is expected to require $ 8200 per year . Each machine is expected to have a 25 - year life with a 5 % salvage value . Using ROR method , calculate which one is more profitable for the company MARR is 10 %.
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
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A tool and die company in Hanover is considering the purchase of a drill press with fuzzy - logic software to improve accuracy and reduce tool wear . The company has the opportunity to buy a slightly used machine for $ 15,000 or a new one for $ 21,000 . Because the new machine is a more sophisticated model , its operating cost is expected to be $ 7000 per year , while the used machine is expected to require $ 8200 per year . Each machine is expected to have a 25 - year life with a 5 % salvage value . Using ROR method , calculate which one is more profitable for the company MARR is 10 %.
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