An international textile company's North America Division must decide which type of fabric cutting machines it will use-a straight knife or a round knife. The estimates are summarized below. Compare them on the basis of annual worths at /= 9%. Round Knife $-250,000 Straight Knife $-180,000 First Cost $-36,000 $36,000 AOC, per Year Overhaul in Year 2 $-16.000 Salvage Value $36,000 $20,000 Life 6 years 4 years The round knife type of fabric cutting machine will be used by the company.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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An international textile company's North America Division must decide which type of fabric cutting machines it will use-a straight knife
or a round knife. The estimates are summarized below. Compare them on the basis of annual worths at /= 9%.
Round Knife
$-250,000
Straight Knife
$-180,000
First Cost
AOC, per Year
$-36,000
$36.000
$-16.000
Overhaul in Year 2
Salvage Value
$36,000
$20,000
Life
6 years
4 years
The round knife
type of fabric cutting machine will be used by the company.
Transcribed Image Text:3:27 An international textile company's North America Division must decide which type of fabric cutting machines it will use-a straight knife or a round knife. The estimates are summarized below. Compare them on the basis of annual worths at /= 9%. Round Knife $-250,000 Straight Knife $-180,000 First Cost AOC, per Year $-36,000 $36.000 $-16.000 Overhaul in Year 2 Salvage Value $36,000 $20,000 Life 6 years 4 years The round knife type of fabric cutting machine will be used by the company.
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