Development projects done by Standalone Products are subsidized by a government grant program. The program pays 30 percent of the total cost of the project (88 summed without discounting; ie., the interest rate is zero), half at the beginning of the project and half at the end, up to a maximum of $100,000. There are two projects being considered. One is a customized checkweigher for cheese products and the other is an automated production scheduling system. Each project has a service life of five years. Costs and benefits for both projects, not including grant income, are shown below. Only one can be done, and the grant money is certain. Standalone Products has a MARR of 15 percent for projects of this type. Using an appropriate rate of return method, which project should be chosen? Checkweigher $32,000 $5,000 $13,000 $7,000 Scheduler $10,000 $12.000 $17,000 $0 First cost Annual costs Annual benefits Salvage value should be chosen. The appropriate increment investment from one project to the other has an (RB of percent. Therefore, (Type an integer or decimal rounded to one decimal place as needed.) the checkweigher project the scheduler project neither project

Development projects done by Standalone Products are subsidized by a government grant program. The program pays 30 percent of the total cost of the project (88 summed without discounting; ie., the interest rate is zero), half at the beginning of the project and half at the end, up to a maximum of $100,000. There are two projects being considered. One is a customized checkweigher for cheese products and the other is an automated production scheduling system. Each project has a service life of five years. Costs and benefits for both projects, not including grant income, are shown below. Only one can be done, and the grant money is certain. Standalone Products has a MARR of 15 percent for projects of this type. Using an appropriate rate of return method, which project should be chosen? Checkweigher $32,000 $5,000 $13,000 $7,000 Scheduler $10,000 $12.000 $17,000 $0 First cost Annual costs Annual benefits Salvage value should be chosen. The appropriate increment investment from one project to the other has an (RB of percent. Therefore, (Type an integer or decimal rounded to one decimal place as needed.) the checkweigher project the scheduler project neither project

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 5E

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K Development projects done by Standalone Products are subsidized by a govemment grant program. The program pays 30 percent of the total cost of the project (costs summed without discounting Le, the interest rate is zero), half at the beginning of the project and half at the end, up to a maximum of $100,000. There are two projects being considered. One is a customized checkweigher for cheese products and the other is an automated production scheduling system. Each project has a service life of five years. Costs and benefits for both projects, not including grant income, are shown below. Only one can be done, and the grant money is certain, Standalone Products has a MARR of 9 percent for projects of this type. Using an appropriate rate of retum method, which project should be chosen? First cost Annual costs Annual benefits Salvage value Checkweigher $32,000 $4.800 $15,000 $8,000 Scheduler $9,000 $13,000 $18.000 SO The appropriate increment investment from one project to the other has an…
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