An international textile company’s North America Division must decide which type of fabric cutting machines it will use–a straight knife or a round knife. The estimates are summarized below. Compare them on the basis of annual worths at i= 14%. Round KnifeStraight KnifeFirst Cost$-300,000$-210,000AOC, per Year$-42,000$-42,000Overhaul in Year 2–$-26,000Salvage Value$42,000$14,000Life6 years4 yearsThe (Click to select) round knife straight knife type of fabric cutting machine will be used by the company.

Given Round knife Straight knife First cost -300,000 -210,000 AOC per year -42,000…

Answered: round knife. The estimates are…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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An international textile company’s North America Division must decide which type of fabric cutting machines it will use–a straight knife or a round knife. The estimates are summarized below. Compare them on the basis of annual worths at i= 14%.

	Round Knife	Straight Knife
First Cost	$-300,000	$-210,000
AOC, per Year	$-42,000	$-42,000
Overhaul in Year 2	–	$-26,000
Salvage Value	$42,000	$14,000
Life	6 years	4 years

The (Click to select) round knife straight knife type of fabric cutting machine will be used by the company.

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