Three methods can be used for producing heat sensors for high-temperature furnaces. The interest rate for the economic evaluation is 10% per year. Method A: Fixed cost of $140,000 per year Production cost of $62 per part Method B: Fixed cost of $210,000 per year Production cost of $28 per part Method C: Equipment first cost of $500,000 Life of 5 years Salvage value of 25% of first cost Production cost of $53 per part Determine the breakeven annual production rate between the two lowest-cost methods.

Three methods can be used for producing heat sensors for high-temperature furnaces. The interest rate for the economic evaluation is 10% per year. Method A: Fixed cost of $140,000 per year Production cost of $62 per part Method B: Fixed cost of $210,000 per year Production cost of $28 per part Method C: Equipment first cost of $500,000 Life of 5 years Salvage value of 25% of first cost Production cost of $53 per part Determine the breakeven annual production rate between the two lowest-cost methods.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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