A process control manager is considering two robots to improve materials handling capacity in the production of
Question:
A process control manager is considering two robots to improve materials handling capacity in the production of rigid shaft couplings that mate dissimilar drive components. Robot X has a first cost of $84,000, an annual M&O cost of $31,000, a $40,000 salvage value, and will improve revenues by $96,000 per year. Robot Y has a first cost of $146,000, an annual M&O cost of $28,000, a $47,000 salvage value, and will increase revenues by $119,000 per year. The company’s MARR is 15% per year and it uses a 3-year study period for economic valuations. Which one should the manager select
(a) On the basis of ROR values,
(b) On the basis of the incremental ROR value?
(c) Which is the correct selection basis? Perform the analysis by hand or spreadsheet, as instructed.
Salvage ValueSalvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...
Step by Step Answer:
By hand in 1000 units a X vs DN i X 0 84 96 31PAi X 3 40PF i X 3 iX 679 Y vs DN i Y 0 146 119 28PAi ...View the full answer
