Question: 4. 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
4. 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 $10,000 per year plus $25 per unit produced. MARR is 12% per year. a. Based on an annual worth analysis, should the equipment be purchased if the expected production is 200 units/year? Why? b. Based on an annual worth analysis, should the equipment be purchased if the expected production is 500 units/year? Why? c. Determine the breakeven value for annual production that will return MARR on the investment in the new equipment
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
