Question

A manufacturing process can be designed for varying degrees of automation. The following is relevant cost information:

4.

A

B

C

D

First Cost

10,000 14,000 20000 9000 7500 5000

500 800 1000

30,000 3000

1500

Annual Labor Expense

Annual Power and Maintenance Expense

Determine which is the best using PW-ATCF , MARR=15%, Depreciation Classical –SL.Assume that each has a life of five(5) years.

No SV or MV at end of the life. Tax rate 38%

Answer 1

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