A manufacturing company is planning to replace two old machines in a production line with either...
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A manufacturing company is planning to replace two old machines in a production line with either two new ones or a single automatic machines which integrates their functions. Relevant cost data are given: Existing machine Proposed replacement Capital Cost Operating expenses per year RM Operating machine per year RM RM Machine 1 30,000 80,000 9,000 Machine 2 20,000 55,000 6,000 Automatic machine 150,000 10,000 The existing machine have no resale value and the economic life of all new machines is 8 years. Dsicount rate is taken to be 14% by the company. i) Find NPV of savings obtainable by replacing the existing machines with: A) Two new machines B) A single automatic machine ii) Which options that you choose, why? A manufacturing company is planning to replace two old machines in a production line with either two new ones or a single automatic machines which integrates their functions. Relevant cost data are given: Existing machine Proposed replacement Capital Cost Operating expenses per year RM Operating machine per year RM RM Machine 1 30,000 80,000 9,000 Machine 2 20,000 55,000 6,000 Automatic machine 150,000 10,000 The existing machine have no resale value and the economic life of all new machines is 8 years. Dsicount rate is taken to be 14% by the company. i) Find NPV of savings obtainable by replacing the existing machines with: A) Two new machines B) A single automatic machine ii) Which options that you choose, why?
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Q1 a Two new machine Cash outflow of machine A Machine B 80000 55000 1... View the full answer
Related Book For
Operations Management in the Supply Chain Decisions and Cases
ISBN: 978-0073525242
6th edition
Authors: Roger Schroeder, M. Johnny Rungtusanatham, Susan Goldstein
Posted Date:
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