### Required InformationAn electric switch manufacturing company is evaluating three different assembly methods. The options vary in cost and lifespan. Here's a breakdown of each method:- **Method A**: - First Cost: $40,000 - Annual Operating Cost (AOC): $12,000 - Service Life: 2 years- **Method B**: - Cost: $70,000 - AOC: $6,000 - Service Life: 4 years- **Method C**: - Initial Cost: $125,000 - AOC: $3,500 - Service Life: 8 years - Salvage Value: Equipment worth 7% of its first cost at the end of its lifeMethod A and B have no salvage value.### Task: Present Worth AnalysisTo choose the optimal assembly method, perform a present worth analysis at an interest rate (i) of 12% per year. Fill in the calculated present worth for each method:- Present Worth of Method A: $ _____- Present Worth of Method B: $ _____- Present Worth of Method C: $ _____After calculating the present values, select the optimal method from the dropdown:- Method [C/Dropdown] is selected.

Present worth is the worth of an investment project to provide a certain amount of expected income,…

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 $ Method C ✓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 $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 $ Method C ✓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 evaluating three different assembly methods. The options vary in cost and lifespan. Here's a breakdown of each method:

- **Method A**:
- First Cost: $40,000
- Annual Operating Cost (AOC): $12,000
- Service Life: 2 years

- **Method B**:
- Cost: $70,000
- AOC: $6,000
- Service Life: 4 years

- **Method C**:
- Initial Cost: $125,000
- AOC: $3,500
- Service Life: 8 years
- Salvage Value: Equipment worth 7% of its first cost at the end of its life

Method A and B have no salvage value.

### Task: Present Worth Analysis

To choose the optimal assembly method, perform a present worth analysis at an interest rate (i) of 12% per year. Fill in the calculated present worth for each method:

- Present Worth of Method A: $ _____
- Present Worth of Method B: $ _____
- Present Worth of Method C: $ _____

After calculating the present values, select the optimal method from the dropdown:

- Method [C/Dropdown] is selected.

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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 $38,000, an annual operating cost (AOC) of $10,000, and a service life of 2 years. Method B will cost $79,000 to buy and will have an AOC of $3,000 over its 4-year service life. Method C costs $143,000 initially with an AOC of $3,000 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 6% of its first cost. Perform a future worth analysis to select the method at i= 13% per year. The future worth of method A is $55118 The future worth of method B is $ The future worth of method C is $ Method B is selected.