Question: Acme is considering purchasing a new vision system for their production line. The vision system would allow them to increase revenue due to improved quality
Acme is considering purchasing a new vision system for their production line. The vision system would allow them to increase revenue due to improved quality and therefore reduced warranty expense. The initial cost of the system is $220,000, and the annual increase in net revenue is $45,000. Acmes MARR is 15%. However, the life of the system is uncertain, with the probability of different asset lives in the following table. Given this information, should Acme purchase the vision system?
Useful life, years (M|8 9 10 11 12 1. p(N) 0.10 0.15 0.25 0.20 0.20 0.05 0.05
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