20 106 Melaka Maju Sdn Bhd will produce two products, door hinge and door steel frame,...
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20 106 Melaka Maju Sdn Bhd will produce two products, door hinge and door steel frame, each of which requires a drilling operation during processing. Two alternative brands of drilling machine (A1 and B2) are being considered for purchase. This purchase and installation cost for Al is RM26,000 per machine, with a 7 years useful life, and may be salvaged for an estimated RM4,000. The annual maintenance cost is RM7,000 and increase RM350 every year. The machine cost for B2 is RM34,000 with 7 years useful life, and may be salvaged for an estimated RM6,200. This machine has special requirement during installation. This requirement will require small renovation at the site and is estimated to be RM2,100. The vendor supplying this machine gave 2 option of annual cost maintenance package to the company. Package 1: RM5,700 every year and increase RM400 per year. Pulley belt also have to be replace at year 2 with cost RM323. Package 2: Free maintenance for early 2 years and only pay the annual maintenance cost RM9,000 start at year 3 till the end. Pulley belt need to be change at year 4 with RM257. Recommend the best drilling machine using Present Worth Analysis with Minimum Attractive Rate of Return set by Melaka Maju Sdn Bhd at 12% per year. 20 106 Melaka Maju Sdn Bhd will produce two products, door hinge and door steel frame, each of which requires a drilling operation during processing. Two alternative brands of drilling machine (A1 and B2) are being considered for purchase. This purchase and installation cost for Al is RM26,000 per machine, with a 7 years useful life, and may be salvaged for an estimated RM4,000. The annual maintenance cost is RM7,000 and increase RM350 every year. The machine cost for B2 is RM34,000 with 7 years useful life, and may be salvaged for an estimated RM6,200. This machine has special requirement during installation. This requirement will require small renovation at the site and is estimated to be RM2,100. The vendor supplying this machine gave 2 option of annual cost maintenance package to the company. Package 1: RM5,700 every year and increase RM400 per year. Pulley belt also have to be replace at year 2 with cost RM323. Package 2: Free maintenance for early 2 years and only pay the annual maintenance cost RM9,000 start at year 3 till the end. Pulley belt need to be change at year 4 with RM257. Recommend the best drilling machine using Present Worth Analysis with Minimum Attractive Rate of Return set by Melaka Maju Sdn Bhd at 12% per year.
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Related Book For
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
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