J&M Manufacturing plans on purchasing a new assembly machinefor $32,000 to automate one of its current manufacturingoperations. It will cost an additional $3,500 to have the newmachine installed. With the new machine, J&M expects to save $12,000 in annual operating and maintenance costs. The machinewill last five years with an expected salvage value of $5,000. a.How long will it take to recover the investment (plus installationcost)? b. If J&M's interest rate is known to be 17%, determine thediscounted payback period.

The objective of this question is to determine the payback period and the discounted payback period…

Answered: J&M Manufacturing plans on purchasing a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $252,000, has a four-year life, and requires $78,000 in pretax annual operating costs. System B costs $354,000, has a six-year life, and requires $72,000 in pretax annual operating costs. Suppose LISC always needs a conveyor belt system; when one wears out, it must be replaced. Assume the tax rate is 34 percent and the discount rate is 8 percent. Calculate the EAC for both conveyor belt systems. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) System A System B EAC 127564.C Which conveyor belt system should the firm choose? • System B ○ System A
#23 * Using NPW to Decide Between Competing Projects: Machine X has an initial cost of $12,000 and annual maintenance of $700 per year. It has a useful life of four years and no salvage value at the end of that time. Machine Y costs $22,000 initially and has no maintenance costs during the first year. Maintenance is $200 at the end of the second year and increases by $200 per year thereafter. Machine Y has a useful life of eight years and an anticipated salvage value of $5,000 at the end of its useful life. If the MARR is 6%, what is the approximate Net Present Worth (NPW) of machine X? A. -$28,563 B. -$25,852 C. -$32,085 D. -$22,318
The General Mills Company (GMC) purchased a milling machine for $80,000, which it intends to use for the next five years. This machine is expected to save GMC $37,000 during the first operating year. Then the annual savings are expected to decrease by 4% each subsequent year over the previous year due to increased maintenance costs. Assuming that GMC would operate the machine for an average of 4,000 hours per year and that it would have no appreciable salvage value at the end of the five-year period, determine the equivalent dollar savings per operating hour at 8% interest compounded annually. Click the icon to view the interest factors for discrete compounding when i = 8% per year. The equivalent net savings are $ per operating hour. (Round to the nearest cent.)
J&M Manufacturing plans on purchasing a new assembly machine for $30,000 to automate one of its current manufacturing operations. It will cost an additional $5,500 to have the new machine installed. With the new machine, J&M expects to save $11,000 in annual operating and maintenance costs. The machine will last five years with an expected salvage value of $6,000. a. How long will it take to recover the investment (plus installation cost)? The payback period is _______years. (Round up to the nearest whole number.) b. If J&M's interest rate is known to be 13%, determine the discounted payback period. The discounted payback period is _______years. (Round up to the nearest whole number.)
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