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# Efficiency of a System & Equipment Purchase

* The Academic Computing Center has five trainers available in its computer labs to provide training sessions to students. Assume that the capacity of the system is 1900 students per semester and the utilization is 90%. If the number of students
who actually got their orientation session is 1500, what is the efficiency of the system?

a. 87.7%
b. 75%
c. 1710 students
d. 1350 students
e. 90%

* A capacity alternative has an initial cost of \$50,000 and cash flow of \$20,000 for each of the next four years. If the cost of capital is 5 percent, the net present value of this investment is approximately:

a. \$20,920
b. \$26,160
c. \$49,840
d. \$70,920
e. \$106,990

* A fabrication company wants to increase capacity by adding a new machine. The firm is considering proposals from vendor A and vendor B. The fixed costs for machine A are \$90,000 and for machine B, \$75,000. The variable cost for A is \$15.00 per unit and for B, \$18.00. The revenue generated by the units processed on these machines is \$21 per unit. If the estimated output is 5000 units, which machine should be purchased?

a. machine A
b. machine B
c. either machine A or machine B
d. no purchase because neither machine yields a profit at that volume
e. purchase both machines since they are both profitable

* Break-even is the number of units at which

a. total profit equals total cost
b. total revenue equals price times quantity
c. total revenue equals total variable cost
d. total revenue equals total fixed cost
e. total revenue equals total cost

#### Solution Preview

· The Academic Computing Center has five trainers available in its computer labs to provide training sessions to students. Assume that the capacity of the system is 1900 students per semester and the utilization is 90%. If the number of students
who actually got their orientation session is 1500, what is the efficiency of the system?

a. 87.7%
b. 75%
c. 1710 students
d. 1350 students
e. 90%

=1500/(1900*90%)=87.7%