An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $34,000, an annual operating cost (AOC) of $8,000, and a service life of 2 years. Method B will cost $74,000 to buy and will have an AOC of $5,000 over its 4-year service life. Method C costs $123,000 initially with an AOC of $5,000 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 10% of its first cost. Perform a future worth analysis to select the method at i= 12% per year. The future worth of method A is $ The future worth of method B is $ The future worth of method C is $
An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $34,000, an annual operating cost (AOC) of $8,000, and a service life of 2 years. Method B will cost $74,000 to buy and will have an AOC of $5,000 over its 4-year service life. Method C costs $123,000 initially with an AOC of $5,000 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 10% of its first cost. Perform a future worth analysis to select the method at i= 12% per year. The future worth of method A is $ The future worth of method B is $ The future worth of method C is $
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter8: Cost Analysis
Section: Chapter Questions
Problem 1.1CE
Related questions
Question
Note:-
- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
- Answer completely.
- You will get up vote for sure.
Transcribed Image Text:An electric switch manufacturing company is trying to decide between three different assembly methods.
Method A has an estimated first cost of $34,000, an annual operating cost (AOC) of $8,000, and a service life
of 2 years. Method B will cost $74,000 to buy and will have an AOC of $5,000 over its 4-year service life.
Method C costs $123,000 initially with an AOC of $5,000 over its 8-year life. Methods A and B will have no
salvage value, but Method C will have equipment worth 10% of its first cost.
Perform a future worth analysis to select the method at i= 12% per year.
The future worth of method A is $
The future worth of method B is $
The future worth of method C is $
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
