Machine A Machine B Initial capital investment $35,000 $150,000 8 years $15,000 10,000 $20 10 years $3,500 Life Market value Parts required per year Labor cost per hour Time to make one part Maintenance cost per year 10,000 $16 20 minutes 10 minutes $1,000 $3,000
Machine A Machine B Initial capital investment $35,000 $150,000 8 years $15,000 10,000 $20 10 years $3,500 Life Market value Parts required per year Labor cost per hour Time to make one part Maintenance cost per year 10,000 $16 20 minutes 10 minutes $1,000 $3,000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Solve, a. Compare the probable part cost from Machine A and Machine B, assuming that each will make the part to the same specification. Which machine yields the lowest part cost? Assume that the MARR = 10% per year. b. If the cost of labor can be cut in half by using part-time employees, which machine should be recommended?
![Machine A Machine B
Initial capital investment
$35,000
$150,000
8 years
$15,000
10,000
$20
10 years
$3,500
Life
Market value
Parts required per year
Labor cost per hour
Time to make one part
Maintenance cost per year
10,000
$16
20 minutes 10 minutes
$1,000
$3,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa798df61-471d-4339-be19-0154284ed5ff%2F1d2d4acf-1bfd-4798-ac7e-588f88465382%2Fbjbcgbe_processed.png&w=3840&q=75)
Transcribed Image Text:Machine A Machine B
Initial capital investment
$35,000
$150,000
8 years
$15,000
10,000
$20
10 years
$3,500
Life
Market value
Parts required per year
Labor cost per hour
Time to make one part
Maintenance cost per year
10,000
$16
20 minutes 10 minutes
$1,000
$3,000
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