Brittany is co-oping this semester at Regency Aircraft, which customizes the interiors of private and corporate jets. Her first assignment is to developthe specifications for a new machine to cut, shape, and sew leather or vinyl covers and trims. The first cost is not easy to estimate due to many options,but the annual revenue and M&O costs should net out at $15,000 per year over a 10-year life. Salvage is expected to be 20% of the first cost. Determine what can be paid for the machine now to recover the cost and an MARR of 8% per year under two scenarios:I: No outside revenue will be developed.II: Outside contracting will occur with estimated revenue of $10,000 the first year, increasing by $5000 per year thereafter. Solve using (a) tabulated factors, and (b) a spreadsheet and the GOAL SEEK tool.
Brittany is co-oping this semester at Regency Aircraft, which customizes the interiors of private and corporate jets. Her first assignment is to develop
the specifications for a new machine to cut, shape, and sew leather or vinyl covers and trims. The first cost is not easy to estimate due to many options,
but the annual revenue and M&O costs should net out at $15,000 per year over a 10-year life. Salvage is expected to be 20% of the first cost. Determine what can be paid for the machine now to recover the cost and an MARR of 8% per year under two scenarios:
I: No outside revenue will be developed.
II: Outside contracting will occur with estimated revenue of $10,000 the first year, increasing by $5000 per year thereafter. Solve using (a) tabulated factors, and (b) a spreadsheet and the GOAL SEEK tool.
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