Alpha Electronics can purchase a needed service for $90 per unit. The same service can be provided by equipment that costs $100,000 and that will have a salvage value of $0 at the end of 10 years. Annual operating costs for the equipment will be $7,000 per year plus $25 per unit produced. MARR is 12%/year.

1. Based on an annual worth analysis, should the equipment be purchased if the expected production is 200 units/year?
2. Based on an annual worth analysis, should the equipment be purchased if the expected demand is 500 units/year?
3. Determine the breakeven value for annual production that will return MARR on the investment in the new equipment.

Answer rating: 100% (QA)

Annual Worth Analysis for Alpha Electronics Equipment Purchase 1 Analysis for 200 unitsyear Annual C... View the full answer