Manufacturing firm is considering purchase of new machine

Assignment Help Business Economics
Reference no: EM13815745

A small manufacturing firm is considering the purchase of a new machine. Two types of machines are available on the market. The lives of Machine A and Machine B are four years and six years respectively, but the firm does not expect to need the service of either for more than five years. The machines have the following expected receipts and disbursements:

Item                                         Machine A                                         Machine B

Initial cost                              $6500                                                 $8500

Service Life                           4 years                                               6 years

Estimated salvage value    $600 at the end of 4 years             $900 at the end of 6 years

Annual O & M costs                        $800                                                   $520

After five years of use, the salvage value for Machine B will be $1000. The firm always has another option: to lease a machine at $3000 per year, fully maintained by the leasing company. The lease payment will be made at the beginning of each year.

(a) How many decision alternatives are there?

(b) Which decision is the best, at MARR = 10%, compounded annually, based on the data given?

Reference no: EM13815745

Questions Cloud

Write an argument in favor of the attorney : Write an argument of 4-6 paragraphs in favor of the attorney's position or against it. Do you believe that the judge should be held to a higher standard because of the fact that he works within the justice system? Why or why not
Determine the annual capital recovery cost for the equipment : The owner of a business is considering investing $55,000 in new equipment. She estimates that the net cash flow will be $5,000 during the first year and will increase by $2,500 per year each year thereafter. Determine the annual capital recovery cost..
Implications for hr departments in managing the employer : What, if any, are the implications for HR departments in managing the employer-employee relationship in the context of the law or issue?
How might financial constraints impact the situation : What are the driving forces or most compelling reasons for addressing this challenge. How might financial constraints impact this situation
Manufacturing firm is considering purchase of new machine : A small manufacturing firm is considering the purchase of a new machine. Two types of machines are available on the market. The lives of Machine A and Machine B are four years and six years respectively, but the firm does not expect to need the servi..
When europeans first arrived in new england : When Europeans first arrived in New England, what did they find? What were the most important ways the New England environment differed from that of Europe?
Examine the contributions of each correctional model : Examine the contributions of each correctional model. Discuss the differences between each correctional model. Choose one and discuss how the model has influenced today's prison system
Question regarding the leadership factors : Write a four page paper (not including the title and reference pages) about your leadership factors according to the Authentic Leadership Self-Assessment Questionnaire. Your paper needs to:
What will be the new market equilibrium price and quantity : A perfectly competitive industry has a large number of potential entrants. all firms have identical cost structure and minimize cost at the same point where Min AC=MC. what will be the new market equilibrium price and quantity?

Reviews

Write a Review

 

Business Economics Questions & Answers

  Proper balance between free market and government regulation

What do you believe is the proper balance between the free market and government regulation of industry? And why?

  Imagine sam discovers a new production technique

Sam sells shavers also Alvin sells after cut off. Imagine Sam discovers a new production technique that lowers his costs of production.

  Market demand and supply functions

If this price floor is implemented, how many units of pork will the government are forced to buy to keep the price at $2.25.

  Evaluate the long-run impacts of the change

Apply the aggregate demand/aggregate supply framework to predict how the chained CPI could potentially impact the economy in the short-run. Evaluate the long-run impacts of the change.

  Illustrate what property by behavior of marginal products

Make a table showing the value of marginal product for each screen from the first through the fifth. Illustrate what property is illustrated by the behavior of marginal products.

  Illustrate what factors might be responsible for situation

President and Congress change budget accordingly, but after 18 months, GDP only increased by three quarters of expected amount. Illustrate what factors might be responsible for this situation.

  Explain how the two companies respond to the macroeconomic

Analyze the current macroeconomic situation and its impact on Walmart and Starbucks. Explore in particular explain how the two companies' respond to the macroeconomic conditions in terms of their.

  What key aspects of the circular flow model need

Use the circular flow model to provide a picture of how households, firms, and governments interact in the US economy and how the US and other economies interact in the global economy

  Q budget constraint suppose that there exists two goods in

q. budget constraint suppose that there exists two goods in the economy soybeans s and textiles t and their prices are

  About the advertising

Your company sells expensive, branded fountain pens. There are 100,000 people aware of your pens. Each of these 100,000 peoples has his or her own willingness to pay for your pens. This willingness to pay numbers are uniformly distributed between $0 ..

  In terms of financial and agricultural ability

What are two ways a seller of labour (that is, someone looking for a job) might reassure a possible employer who is faced with imperfect information? What are two ways that a farmer looking to rent ground might reassure a landowner that is faced with..

  Briefly state basic characteristics of pure competition

Briefly state basic characteristics of pure competition, pure monopoly, monopolistic competition and oligopoly. Under which of se market classifications does each of following most accurately fit.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd