A company is planning to install a new automated plastic-molding press. Four different presses are available....

 

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A company is planning to install a new automated plastic-molding press. Four different presses are available. The initial capital investments and annual expenses for these four mutually exclusive alternatives are as follows: Press Capital investment Useful life (years) Annual expenses Power Labor Maintenance Property taxes & insurance Total annual expenses P1 $24,000 5 2,720 26,400 1,600 480 $31,200 P2 $30,400 5 2,720 24,000 1,800 608 $29,128 P3 $49,600 5 4,800 16,800 2,600 992 $25,192 P4 $52,000 5 5,040 14,800 2,000 1,040 $22,880 Assume that each press has the same output capacity and has no market value at the end of its useful life; the selected analysis period is five years. Which press should be chosen? Use MARR = 20% per year. A company is planning to install a new automated plastic-molding press. Four different presses are available. The initial capital investments and annual expenses for these four mutually exclusive alternatives are as follows: Press Capital investment Useful life (years) Annual expenses Power Labor Maintenance Property taxes & insurance Total annual expenses P1 $24,000 5 2,720 26,400 1,600 480 $31,200 P2 $30,400 5 2,720 24,000 1,800 608 $29,128 P3 $49,600 5 4,800 16,800 2,600 992 $25,192 P4 $52,000 5 5,040 14,800 2,000 1,040 $22,880 Assume that each press has the same output capacity and has no market value at the end of its useful life; the selected analysis period is five years. Which press should be chosen? Use MARR = 20% per year.

Answer rating: 100% (QA)

Press P4 minimizes the Present Worth and the Net Worth values of total costs and hence is the ... View the full answer