A sports wear factory has two alternative machines for producing jerseys. Costs are shown below. Minimum acceptable rate of return is 8%.What is the annual cost for machine X? Initial CostSalvage ValueOperating CostsLifeMachine XP 243,000P 36,450P 9,500/yr15 yrsMachine YP 333,000P 33,300P 6,300/yr (1st 10 years)P 8,100/yr (2nd 10 years)20 yrs

Given; For Machine X:- Initial Cost= P243000Salvage Value= P36450Operating Costs= P9500 per…

Answered: A sports wear factory has two…

A sports wear factory has two alternative machines for producing jerseys. Costs are shown below. Minimum acceptable rate of return is 8%. What is the annual cost for machine X?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A sports wear factory has two alternative machines for producing jerseys. Costs are shown below. Minimum acceptable rate of return is 8%.

What is the annual cost for machine X?

Initial Cost
Salvage Value
Operating Costs
Life
Machine X
P 243,000
P 36,450
P 9,500/yr
15 yrs
Machine Y
P 333,000
P 33,300
P 6,300/yr (1st 10 years)
P 8,100/yr (2nd 10 years)
20 yrs

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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