Tool A Tool B Tool C Investment costs $55,000 $45,000 $80,000 Annual expenses $6,250 Annual revenue $3,200 $18,250 $16,750 $20,200 $22,000 $8,550 Market value $18,000 $3,750 7.9% IRR 15.9% 14.6%
Tool A Tool B Tool C Investment costs $55,000 $45,000 $80,000 Annual expenses $6,250 Annual revenue $3,200 $18,250 $16,750 $20,200 $22,000 $8,550 Market value $18,000 $3,750 7.9% IRR 15.9% 14.6%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Acme Semiconductor is expanding its facility and needs to add equipment. There are three process tools under consideration. You have been asked to perform an economic analysis to select the most appropriate tool to acquire. You have gathered the following information for evaluation. Each of these tools has a useful life of seven years. Acme’s accounting staff has established a company-wide MARR of 8% per year.Which one of the process tools should be selected?
Transcribed Image Text:Tool A Tool B
Tool C
Investment costs $55,000 $45,000 $80,000
Annual expenses $6,250
Annual revenue
$3,200
$18,250 $16,750 $20,200
$22,000
$8,550
Market value
$18,000 $3,750
7.9%
IRR
15.9%
14.6%
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