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.
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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc8162c22-92f3-4f83-a455-725ebe7b8bb0%2Fdb418dd7-9c04-4921-a53b-e853cbf2c4a2%2F9in38s1d_processed.png&w=3840&q=75)
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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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