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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In one stage of its chili canning operation, Ashley Foods, Inc. has decided that any of five devices can be used. The costs of the machines are calculated below, and it is calculated that all machines will have a useful life of 4 years. Determine which computer should be chosen based on a rate of return study if the minimum attractive rate of return is 20 percent per year.

Machine
1
2
3
4
5
First Cost, $
-31,000
-29,000
-34,500
-49,000
-41,000
Annual
Operating
Cost, $ per Year
-16,000
-19,300
-17,000
-12,200
-15,500

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