! Required information An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $41,000, an annual operating cost (AOC) of $13,000, and a service life of 2 years. Method B will cost $82,000 to buy and will have an AOC of $4,500 over its 4-year service life. Method C costs $117,000 initially with an AOC of $4,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 9% of its first cost. Perform a future worth analysis to select the method at /= 8% per year. The future worth of method A is $ 65,832.64 The future worth of method B is $ 98,183.44 The future worth of method C is $ 157,622.43 Method с is selected.

! Required information An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $41,000, an annual operating cost (AOC) of $13,000, and a service life of 2 years. Method B will cost $82,000 to buy and will have an AOC of $4,500 over its 4-year service life. Method C costs $117,000 initially with an AOC of $4,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 9% of its first cost. Perform a future worth analysis to select the method at /= 8% per year. The future worth of method A is $ 65,832.64 The future worth of method B is $ 98,183.44 The future worth of method C is $ 157,622.43 Method с is selected.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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! Required information An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $40,000, an annual operating cost (AOC) of $12,000, and a service life of 2 years. Method B will cost $70,000 to buy and will have an AOC of $6,000 over its 4-year service life. Method C costs $125,000 initially with an AOC of $3,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 7% of its first cost. Perform a present worth analysis to select the method at /= 12% per year. The present worth of method A is $ The present worth of method B is $ The present worth of method C is $ ✓is selected. Method C
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