ABC Drinks purchases its 355 ml cans in large bulk from Wald-China Can Corporation. The finish on the anodized aluminum surface is producedby mechanical finishing technology 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 two alternatives.Brush alternative: P $400,000; n = 10 years; S = $50,000; nonlaborAOC = $-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 Drinks purchases its 355 ml cans in large bulk from Wald-China Can Corporation. The finish on the anodized aluminum surface is producedby mechanical finishing technology 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 two alternatives.Brush alternative: P $400,000; n = 10 years; S = $50,000; nonlaborAOC = $-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 Drinks 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 technology 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 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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