Question

A construction company has three choices of the type of machine to be used for their project (interest rate is 7% for all options). The choices are as following:

a. Machine sold by manufacturer A- This machine has an initial cost
of $750,000, Salvage value of 100,000 sold after 50 years, and the
variable cost of $55 per hour and maintenance cost of $4 per hour
of usage.

b. Machine sold by manufacturer B- This machine has an initial cost of $550,000, Salvage value of 50,000 sold after 50 years, and the variable cost of $75 per hour and maintenance cost of $7 per hour of usage.

c. Machine sold by manufacturer C- This machine has an initial cost of $250,000, Salvage value of 10,000 sold after 50 years, and the variable cost of $95 per hour and maintenance cost of $10 per hour of usage.

Which Manufacturer should this company choose? (Show calculations and draw graphical representation)

Answer #1

A construction company
has three choices of the type of machine to be used for their
project (interest rate is 7% for all options). Which
Manufacturer should this company choose? (Show calculations and
draw graphical representation)The choices are as
following:
a. Machine sold by
manufacturer A- This machine has an initial cost of $750,000,
Salvage value of 100,000 sold after 50 years, and the variable cost
of $55 per hour and maintenance cost of $4 per hour of usage.
b....

A small aerospace company is evaluating two alternatives: the
purchase of an automatic-feed machine and a manual-feed machine for
a product’s finishing process. The auto-feed machine has an initial
cost of $23,000, an estimated salvage value of $4,400 and a
predicted life of 10 years. One person will operate the machine at
a cost of $12 an hour. The expected output is 8 tons per hour.
Annual maintenance and operating cost is expected to be $3,500.
The manual-feed machine has...

A company is analyzing a pressing machine to acquire. The
purchasing price of this machine is $300,000. This machine will be
used towards pressing 1,000 products every 6 months, which each
will be sold for $50. Its operating and maintenance cost will be
$7000 in the first semi-annual and it increases by $500 every six
months (semi-annual) after that till the end of its useful life,
which year 7. The salvage value at the end of year 7 will be...

13-30
A $25,000 machine that has been used for one year has a salvage
value of $16,000 now, which will drop by $4,000 per year. The
maintenance costs for the next 4 years are $1,250, $1,450, $1,750
and $2,250. When the machine is sold, it will cost $2,000 to remove
and sell. When machine was purchased, the estimated salvage in 5
years was $3,500. What is the marginal cost for each year?

Colombia Company has provided the following data for maintenance
cost:
Prior
Year
Current
Year
Machine hours
18,000
20,300
Maintenance
cost
$34,700
$37,460
Maintenance cost is a mixed cost with variable and fixed
components. The fixed and variable components of maintenance cost
are closest to:
rev: 12_20_2016_QC_CS-72978
$13,100 per year plus $.833 per machine hour
$24,360 per year plus $.833 per machine hour
$13,100 per year plus $1.20 per machine hour
$34,700 per year plus $1.20 per...

A company is considering the purchase of a machine. For this he
has received two proposals that meet the requested technical
requirements. The considerations economic of each machine are the
following:
Machine A Machine B
Initial cost $ 60,000 $ 40,000
Maintenance cost in the first year 5,000 8,000
Annual increase in maintenance cost 600 10%
Shelf life (years) 8 4
Salvage Value 6,000 4,000
Considering an interest rate of 5% capitalized annually, what
machine would you recommend Use the...

Esquire Company needs to acquire a molding machine to be used in
its manufacturing process. Two types of machines that would be
appropriate are presently on the market. The company has determined
the following: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of
$1 and PVAD of $1) (Use appropriate factor(s) from the tables
provided.) Machine A could be purchased for $35,750. It will last
10 years with annual maintenance costs of $1,300 per year....

Machine X has an initial cost of $12,000 and annual maintenance
of $700 per year. It has a useful life of four years and no salvage
value at the end of that time. Machine Y costs $22,000 initially
and has no maintenance costs during the first year. Maintenance is
$200 at the end of the second year and increases by $200 per year
thereafter. Machine Y has a useful life of eight years and an
anticipated salvage value of $5,000...

The initial cost of a new machine is 10, 000. the annual
maintenance cost is 2000 for the first two years, then increases
1000 every year after that. The machine has 10 years useful life
with salvage value of 4000. Calculate EUAC for keeping the
machine

Esquire Company needs to acquire a molding machine to be used in
its manufacturing process. Two types of machines that would be
appropriate are presently on the market. The company has determined
the following: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of
$1 and PVAD of $1) (Use appropriate
factor(s) from the tables provided.)
Machine A could be purchased for $66,000. It will last 10 years
with annual maintenance costs of $2,300 per year....

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