ABC Beverage, LLC purchases its 355-ml cans in large bulk from Wald-China Can Corporation. The finish on the anodized aluminum surface is produced by mechanical finishing technologies called brushing or bead blasting. Engineers at Wald are switching to more efficient, faster, and cheaper machines to supply ABC. Use the estimates and MARR = 8% per year to select between the two alternatives. Brush alternative: P = $−400,000; n = 10 years; S = $50,000; nonlabor AOC = $−60,000 in year 1, decreasing by $5000 annually starting in year 2 Bead blasting alternative: P = $−400,000; n is large, assume permanent; no salvage; nonlabor AOC = $−70,000 per year
ABC Beverage, LLC purchases its 355-ml cans in large bulk from Wald-China Can Corporation. The finish on the anodized aluminum surface is produced by mechanical finishing technologies called brushing or bead blasting. Engineers at Wald are switching to more efficient, faster, and cheaper machines to supply ABC. Use the estimates and MARR = 8% per year to select between the two alternatives. Brush alternative: P = $−400,000; n = 10 years; S = $50,000; nonlabor AOC = $−60,000 in year 1, decreasing by $5000 annually starting in year 2 Bead blasting alternative: P = $−400,000; n is large, assume permanent; no salvage; nonlabor AOC = $−70,000 per year
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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ABC Beverage, LLC purchases its 355-ml cans in
large bulk from Wald-China Can Corporation. The
finish on the anodized aluminum surface is produced
by mechanical finishing technologies called
brushing or bead blasting. Engineers at Wald are
switching to more efficient, faster, and cheaper machines
to supply ABC. Use the estimates and
MARR = 8% per year to select between the two
alternatives.
Brush alternative: P = $−400,000; n = 10 years;
S = $50,000; nonlabor AOC = $−60,000 in year 1,
decreasing by $5000 annually starting in year 2
Bead blasting alternative: P = $−400,000; n is
large, assume permanent; no salvage; nonlabor
AOC = $−70,000 per year
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