Ashai Operators are involved in doing machining operations for a major auto manufacturer in Neida. Ashai purchased a new lathe for drilling operation at a cost of Rs. 2,00,000 from Mega tech Engineers on June 15, 2006. Ashai paid 20% of the amount in cash and rest was financed with the help of a bank loan which would involve a monthly repayment of Rs. 5700 for the next 36 months. A dealer of ABT Designers, an advanced CNC machine manufacturer, approached Ashai Operators with an existing offer on July 10, 2006. The dealer agreed to supply a newly designed CNC machine that had been recently introduced in the market. He also offered special financing arrangements and agreed to pay Rs, 75,000 for the old lathe, which would serve as the down payment required for the new CNC machine. In addition, ABT would require monthly payment of Rs. 6800 per montr for the next 35 months. The CNC machine relied on new technology which would reduce the labor required to operate the machine. Ashai estimated that labor cost would reduce by Rs. 5200 per month on the average if it purchased the ABT Designer's machine. In addition, the new machine would decrease.

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1 Purchase of the Lathe from Mega tech Engineers Cost of the lathe Rs 200000 Payment made 20 in cash 02 Rs 200000 Rs 40000 Amount financed through a b... View the full answer