Repeat Problem 9 assuming that floor support and vibration dampening must be added for the gang punch.
Question:
Repeat Problem 9 assuming that floor support and vibration dampening must be added for the gang punch. These one-time first costs are estimated to be \(\$ 35,000\).
Data From Problem 9
Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards more efficiently. The punch has a first cost of \(\$ 100,000\) and a useful life of 15 years. At the end of its useful life, the punch has no salvage value. Annual labor costs would increase \(\$ 2,000\) using the gang punch, but annual raw material costs would decrease \(\$ 12,000\). MARR is 5 percent/year.
a. What is the present worth of this investment?
b. What is the decision rule for judging the attractiveness of investments based on present worth?
c. Should Bailey buy the gang punch?
Step by Step Answer:
Principles Of Engineering Economic Analysis
ISBN: 9781118163832
6th Edition
Authors: John A. White, Kenneth E. Case, David B. Pratt