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 $
Chapter1: Making Economics Decisions
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![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 $](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8ee4bc89-97ad-456e-90f9-f28d2b0da57f%2F8768522a-e7ad-4652-bebc-c00f2311ca97%2Ff8xn4s_processed.png&w=3840&q=75)
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 $
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