Problem 08.023- Determine which robot to select based on incremental rate of returnA process control manager is considering two robots to improve materials-handling capacity in the production of rigid shaft couplingsthat make dissimilar drive components. Robot X has a first cost of $84,000, an annual M&O cost of $31,000, and $40,000 salvagevalue, and it will improve revenues by $96,000 per year. Robot Y has a first cost of $146,000, an annual M&O cost of $28,000, and$47,000 salvage value, and it will increase revenues by $125,000 per year. The company's MARR is 25.00% per year, and it uses a 3-year study period for economic evaluations. Calculate the incremental ROR, and identify the robot the manager should select. (Roundthe final answer to three decimal places.)The incremental ROR is 26.598 %.The manager should select robotY

Incremental ROR is a financial analysis performed to determine best and financially profitable…

Answered: Problem 08.023- Determine which robot…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Assume that the operations manager of a small semi-conductor manufacturer wants to run a Simulation model to better understand the uncertainties related to cost and demand for a particular product. He assumes that the total cost per month could be anywhere between $150,000 and $200,000 with equal likelihood. He also assumes that the demand is normally distributed with a mean of 5,000 items per month and a standard deviation of 1,000. Each item is sold for $95. a) Use the random numbers in the following table to simulate the costs, revenues and profits per month. Use Random Number A to generate the costs and Random Number B to generate the revenues per month and then calculate the profit as the difference between revenues and costs. Complete the table by reporting the minimum, maximum and average profit per month according to this simulation. Trial 1 2 3 4 5 6 7 8 9 10 you b) Can Random A 0.23 you 0.04 0.14 0.07 0.03 0.67 0.26 0.03 0.83 0.32 Cost Random B 0.75 0.89 0.82 0.33 0.96 0.67…
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