An international textile company’s North America Division must decide which type of fabric cutting machines it will use—straight knife or round knife. The estimates are summarized below. Compare them on the basis of annual worths values at i = 10% per year using (a) factors, and (b) single-cell spreadsheet functions. Round Knife Straight Knife First cost, $ −250,000 −170,000 AOC, $/year −31,000 −35,000 Overhaul in year 2, $ — −26,000 Salvage value, $ 40,000 10,000 Life, years 6 4
An international textile company’s North America Division must decide which type of fabric cutting machines it will use—straight knife or round knife. The estimates are summarized below. Compare them on the basis of annual worths values at i = 10% per year using (a) factors, and (b) single-cell spreadsheet functions. Round Knife Straight Knife First cost, $ −250,000 −170,000 AOC, $/year −31,000 −35,000 Overhaul in year 2, $ — −26,000 Salvage value, $ 40,000 10,000 Life, years 6 4
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
An international textile company’s North America
Division must decide which type of fabric cutting
machines it will use—straight knife or round knife.
The estimates are summarized below. Compare
them on the basis of annual worths values at i = 10%
per year using (a) factors, and (b) single-cell spreadsheet
functions.
Round Knife Straight Knife
First cost, $ −250,000 −170,000
AOC, $/year −31,000 −35,000
Overhaul in year 2, $ — −26,000
Salvage value, $ 40,000 10,000
Life, years 6 4
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