the number of hours required to run per year to break even.
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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Question
A company currently has 6 people on a crew doing a manual labor job. Each person is paid at the rate of 12.00 per hour. A machine is being considered at the cost of $88,000. This machine operated by one technician who is paid at the rate of 18.00 per hour will have an hourly output equal to the six man crew. The machine will last 3 years. At an interest rate of 9% what is the number of hours required to run per year to break even.
Expert Solution
Step 1
Let number of hours per year be H. Then for equivalence, Annual worth (PW) of costs for both options are equal.
6 x $12 x H = $88,000 x A/P(9%, 3) + $18 x H 72H
72H =88,000 x 0.3951 + 18*H*72*H
72H = 34760 + 1296 H^2
On solving we get, H = 644
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