A company is considering two alternatives for manufacturing a certain part. Method R will have a first cost of $40,000, and annual operating cost of $25,000, and a $10,000 salvage value after its five-year life. Method S will have an initial cost of $100,00, an annual operating cost of $15,000 and a $12,000 salvage value after its 10-year life. At an interest rate of 12% per yr, the present worth values of the alternatives are closest to; A. PWR = $ 124,446 PWR= $180,889 B. PWR = $ 124,446 PWR= $147,263 (ANSWER) C. PWR= $195,057 PWS= $180,886 D. PWR= $195,057 PWS=$147,263
A company is considering two alternatives for manufacturing a certain part. Method R will have a first cost of $40,000, and annual operating cost of $25,000, and a $10,000 salvage value after its five-year life. Method S will have an initial cost of $100,00, an annual operating cost of $15,000 and a $12,000 salvage value after its 10-year life. At an interest rate of 12% per yr, the present worth values of the alternatives are closest to; A. PWR = $ 124,446 PWR= $180,889 B. PWR = $ 124,446 PWR= $147,263 (ANSWER) C. PWR= $195,057 PWS= $180,886 D. PWR= $195,057 PWS=$147,263
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 9E: Machine replacement decision A company is considering replacing an old piece of machinery, which...
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A company is considering two alternatives for manufacturing a certain part. Method R will have a first cost of $40,000, and annual operating cost of $25,000, and a $10,000 salvage value after its five-year life. Method S will have an initial cost of $100,00, an annual operating cost of $15,000 and a $12,000 salvage value after its 10-year life. At an interest rate of 12% per yr, the present worth values of the alternatives are closest to;
A. PWR = $ 124,446 PWR= $180,889
B. PWR = $ 124,446 PWR= $147,263 (ANSWER)
C. PWR= $195,057 PWS= $180,886
D. PWR= $195,057 PWS=$147,263
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