Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
A small manufacturing company is considering the addition of one or more of four new product lines. If the total amount of investment capital available for new ventures is $800,000, which one(s) should the company undertake on the basis of a present worth analysis? Assume the company uses a 5-year project recovery period and a MARR of 20% per year. All cash flows are in $1000 units.
![Product Lines
R1
S2
T3
U4
First cost, $
- 200
-400
- 500
- 700
M&O cost, $/year
-50
- 200
- 300
-400
Revenue, $/year
150
450
520
770](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F52baf89d-efdd-49a3-9ba1-9b00414d8a35%2F5ffb8064-81b4-4d02-a62c-5ee3ce56c0c0%2F616wx7m_processed.png&w=3840&q=75)
Transcribed Image Text:Product Lines
R1
S2
T3
U4
First cost, $
- 200
-400
- 500
- 700
M&O cost, $/year
-50
- 200
- 300
-400
Revenue, $/year
150
450
520
770
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