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 $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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No written by hand solution An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $30,000, an annual operating cost (AOC) of $4,000, and a service life of 2 years. Method B will cost $70,000 to buy and will have an AOC of $3,000 over its 4-year service life. Method C costs $115,000 initially with an AOC of $3,000 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 6% of its first cost.
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