Remerowski Corporation Inc. asks you to estimate the cost to purchase a new piece of production equipment. The company purchased this same type of equipment in the past for $10,000. The original equipment had a capacity of 2000 units, while the new equipment has a capacity of 1000 units. The power-sizing exponent for this type of equipment is 0.28. In addition, the cost index for this type of equipment was 126 when the original unit was purchased and is now 160. If Remerowski uses an 8% annual interest rate to evaluate equipment purchases, estimate the cost to purchase the new piece.
Remerowski Corporation Inc. asks you to estimate the cost to purchase a new piece of production equipment. The company purchased this same type of equipment in the past for $10,000. The original equipment had a capacity of 2000 units, while the new equipment has a capacity of 1000 units. The power-sizing exponent for this type of equipment is 0.28. In addition, the cost index for this type of equipment was 126 when the original unit was purchased and is now 160. If Remerowski uses an 8% annual interest rate to evaluate equipment purchases, estimate the cost to purchase the new piece.
It is given that :
Original Equipment:
cost of similar old equipment- $10,000
Capacity- 2000 units
cost index- 126
New equipment :
Capacity- 1000 units
Cost index now- 160
power-sizing exponent- 0.28
Interest – 8%
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
