A company that manufactures clear PVC pipe is investigating the production options of batch and continuous processes.
Question:
A company that manufactures clear PVC pipe is investigating the production options of batch and continuous processes. Estimated cash flows are as follows:
The chief operating officer (COO) has asked you to determine if the batch option would ever have a lower annual worth than the continuous flow system, using interest rates over a range of 5% to 15% for the batch option but only 15% for the continuous flow system.
Transcribed Image Text:
Batch Continuous First cost, $ Annual cost, $ per year Salvage value for any year, S Life, years 80,000 130,000 55,000-30,000 10,000 3-10 40,000
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