upgrading manufacturing facilities
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Please help with the following problem regarding upgrading manufacturing facilities.
You are considering upgrading some manufacturing facilities by purchasing one of three different machines, each with the same production capacity. Machine a costs $30,000, has a life of 40 years, annual maintenance costs of $1500, and salvage value of $5000. Machine b costs $20,000, has a life of 20 years, annual maintenance of $2000 and salvage value of $3000. Machine c costs $10,000 has a life of 10 years annual maintenance of $4000 and no salvage value. Determine the most economical choice based on minimizing the present value of total costs. Use an annual discount rate of 10%. Assume that initial costs, annual maintenance, and discount rates are constant throughout the analysis period.
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This solution helps with a problem about upgrading manufacturing facilities. The answer to the problem is provided in an Excel spreadsheet.
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Machine A B C
Cost $30,000 $20,000 $10,000 ...
Education
- BE, Bangalore University, India
- MS, University of Wisconsin-Madison
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