machine and a manual feed machine for a finishing process. The auto feed machine has an initial cost of $23,000, an estimated salvage value of $4000, and a predicted life of 10 years. One person will operate the machine at a rate of $12 per hour. The expected output is 8 tons per hour. Annual maintenance and operating cost is expected to be $3500. The alternative manual feed machine has a first cost of $8000, no expected salvage value, a 5-year life, and an output of 6 tons per hour. However, three workers will be required at $8 per hour each. The machine will have an annual maintenance and operation cost of $1500. All projects are expected to generate a return of 10% per year. How many tons per year must be finished to justify the higher purchase cost of the auto feed machine?

machine and a manual feed machine for a finishing process. The auto feed machine has an initial cost of $23,000, an estimated salvage value of $4000, and a predicted life of 10 years. One person will operate the machine at a rate of $12 per hour. The expected output is 8 tons per hour. Annual maintenance and operating cost is expected to be $3500. The alternative manual feed machine has a first cost of $8000, no expected salvage value, a 5-year life, and an output of 6 tons per hour. However, three workers will be required at $8 per hour each. The machine will have an annual maintenance and operation cost of $1500. All projects are expected to generate a return of 10% per year. How many tons per year must be finished to justify the higher purchase cost of the auto feed machine?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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