Question: Compare the probable part cost from Machine A. Machine B, and Machine C, assuming that ench will make the part to the same specification. (1)

Compare the probable part cost from Machine A. Machine B, and Machine C, assuming that ench will make the part to the same specification. (1) Which machine yields the lowest part cost? Assume that the MARR - 12% per year. Machine A Machine B Machine C Initial capital investment $50,000 $100,000 $125,000 Life 2 year 4 years 8 years Market value $5000 $6000 $7000 Parts required per year 8,000 8,000 Labor cost per hour $15 $20 $25 Time to make one part 25 minutes 30 minutes 50 minutes Maintenance cost per year $750 $1,250 $1500 8,000 (2) Assuming a useful life of 5 years for each Machine, a desired MARRIN 12% per year. Which design should be selected on the basis of IRR incremental method

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