! 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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Question

!
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 i = 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
Return to question
is selected.

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