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 i = 10%. First Cost AOC, per Year Overhaul in Year 2 Salvage Value Life Round Knife $-300,000 $-44,000 $44,000 6 years Straight Knife $-220,000 $-44,000 $-26,000 $13,000 4 years Calculate the Annual Worth of each type of fabric cutting machine and select which type should be selected.

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 i = 10%. First Cost AOC, per Year Overhaul in Year 2 Salvage Value Life Round Knife $-300,000 $-44,000 $44,000 6 years Straight Knife $-220,000 $-44,000 $-26,000 $13,000 4 years Calculate the Annual Worth of each type of fabric cutting machine and select which type should be selected.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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