Question 1

A manufacturing process can be designed for varying degrees of automation. The following is relevant cost information:

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Degree of Automation A B C D

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First Cost $13,000 $15,000 $19,000 $31,000

Annual Labor Expense $10,000 $8,500 $6,000 $4,000

Annual Maint Expense $600 $900 $1,100 $1,600

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Determine minimum equivalent uniform annual cost (EUAC) of operation for the best selection (A, B, C, or D), by after-tax analysis using an income-tax rate of 48 %, an after-tax MARR of 10 %, and SL depreciation. Assume each has a life of 3 years and no BV or MV at the end of this period. (Enter a positive number and do not enter the dollar sign $ with your answer.)