Required information An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $34,000, an annual operating cost (AOC) of $5,000, and a service life of 2 years. Method B will cost $77,000 to buy and will have an AOC of $4,000 over its 4-year service life. Method C costs $145,000 initially with an AOC of $6,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 13% of its first cost. Perform a future worth analysis to select the method at i= 14% per year. The future worth of method A is $ The future worth of method B is $ The future worth of method C is $ Method (Click to select) v 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 $34,000, an annual operating cost (AOC) of $5,000, and a service life of 2 years. Method B will cost $77,000 to buy and will have an AOC of $4,000 over its 4-year service life. Method C costs $145,000 initially with an AOC of $6,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 13% of its first cost. Perform a future worth analysis to select the method at i= 14% per year. The future worth of method A is $ The future worth of method B is $ The future worth of method C is $ Method (Click to select) v is selected.

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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The operations manager at Sebago Manufacturing is considering three proposals for supplying a critical component for its new line of electric watercraft. Proposal one is to purchase the component, proposal two is make the component in-house using rebuilt equipment, and proposal three is to purchase new, highly automated equipment. The costs associated with each proposal are provided in the table below. Proposal Annual cost ofcapital required Variable cost ofeach component One: purchase $0.00 $22.00 Two: make with rebuiltequipment $150,000.00 $14.00 Three: make with newequipment $450,000.00 $12.50 At what quantity range will each option be preferred?
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Day Star collected the following information: Cost to buy one unit Production costs per unit: Direct materials Direct labour Variable overhead Total fixed overhead Day Star can sell 25,000 units per year, at $80 each. The company also has an offer from a subsidiary to rent its plant facilities for $2,000,000. The fixed overhead will be incurred in each alternative, but there will be a savings of $150,000 in the fixed costs under the renting alternative. A) buy Based on the above information only, should Day Star make or buy the product or rent its facilities out? B) make $22 $16 $2 $360,000 C) either make or buy - indifferent $48 D) rent the facilities to the subsidiary E) either make or rent - indifferent
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A company is considering supplying employees with company cars. Employee travel is expected to be a total of 30,000 miles per year for all employees. Supplying employees with company cars would involve the following cost components: Car purchase: $22,000 with an estimated 3-year life Salvage value: $5000 Insurance cost: $1000/year Operating and maintenance expenses: $0.22 per mile The company uses a MARR of 10%. The total cost per mile of providing company cars to employees is: $ per mile (Round the answer to two decimal places. Do not enter the dollar symbol or the words per mile in you answer. If the number is a fraction less than one, include the leading zero in the answer. eg. 0.12) The company pays employees $0.40 per mile to use their own car. Compare this with the number you calculated in the previous question. The company should provide cars to its employees? Type Yes or No for the decision:
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Concord Corporation can produce 100 units of a necessary component part with the following costs: Direct Materials $24000 Direct Labor 8000 Variable Overhead 25000 Fixed Overhead 8000 If Concord Corporation purchases the component externally, $2000 of the fixed costs can be avoided. What is the maximum amount Concord is willing to pay to purchase the 100 units?
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An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $46,000, an annual operating cost (AOC) of $7,000, and a service life of 2 years. Method B will cost $86,000 to buy and will have an AOC of $3,500 over its 4-year service life. Method C costs $115,000 initially with an AOC of $6,000 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 12% of its first cost. Perform a future worth analysis to select the method at /= 10% per year. The future worth of method A is $ The future worth of method B is $ The future worth of method C is $ Method: (Click to select) is selected. (Click to select C CBA A
We project unit sales for a new household-use laser-guided cockroach search and destroy system as follows: Year 1 2 3 4 5 The new system will be priced to sell at $465 each. The cockroach eradicator project will require $2,000,000 in net working capital to start, and total net working capital will rise to 15% of the change in sales. The variable cost per unit is $335, and total fixed costs are $2,300,000 per year. The equipment necessary to begin production will cost a total of $21 million. This equipment is mostly industrial machinery and thus qualifies for CCA at a rate of 20%. In five years, this equipment will actually be worth about 20% of its cost. NPV Unit Sales 100,000 112,000 135,000 141,000 94,000 The relevant tax rate is 35%, and the required return is 15%. Based on these preliminary estimates, what is the NPV of the project? (Enter the answer in dollars. Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)…
Morton and Moore LLC (M²) is trying to decide between two machines that are necessary in its manufacturing facility. If M² has a MARR of 10%, which of the following machines should be chosen? Hint: Minimize EUAC. Machine A Machine B 6- 28 620 First cost $45,000 $24,000 Annual operating costs 31,000 35,000 Overhaul in Years 2 and 4 6,000 Overhaul in Year 5 12,000 Salvage value 10,000 8,000 Useful life 8 years 6 years 1 Ne Ac Ca Ca EM Ye Co Pr Ri Vi Ge Lit Ra Ne An Pr Sa Sc Be

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