Expanding its facility and needs to add equipment

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Acme Semiconductoris 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? (6.4)

                                   Tool A             Tool B            Tool C

Investment costs         $55,000         $45,000         $80,000

Annual expenses         $6,250          $8,550            $3,200

Annual revenue          $18,250 $16,750           $20,200

Market value               $18,000         $3,750             $22,000

IRR                            15.9%              7.9%                14.6%

Using both present worth approach and IRR approach

Sullivan, William G.; Wicks, Elin M.; Koelling, C. Patrick (2014-01-06). Engineering Economy (16th Edition) (Page 294). Prentice Hall. Kindle Edition.

Reference no: EM13852953

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