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Batch Continuous First cost, $ -80,000 - 130,000 Annual cost, S/year Salvage value, $ -55,000 -30,000 10,000 40,000 Life, years 3 to 10 5

Batch Continuous First cost, $ -80,000 - 130,000 Annual cost, S/year Salvage value, $ -55,000 -30,000 10,000 40,000 Life, years 3 to 10 5

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A company that manufactures clear PVC pipe is investigating two production options with the following cash flow estimates. The chief operating officer (COO) has asked you to determine if the batch option would ever have a lower annual worth than the continuous flow system using interest rates over a range of 5% to 15% for the batch option, but only 15% for the continuous
flow system. The batch process can be used anywhere from 3 to 10 years. (Note: The continuous flow process was previously determined to have its lowest cost over a 5-year life cycle.)

Batch Continuous First cost, $ -80,000 - 130,000 Annual cost, S/year Salvage value, $ -55,000 -30,000 10,000 40,000 Life, years 3 to 10 5
Transcribed Image Text:Batch Continuous First cost, $ -80,000 - 130,000 Annual cost, S/year Salvage value, $ -55,000 -30,000 10,000 40,000 Life, years 3 to 10 5
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