The manager of a canned food processing plant is trying to decide between two labeling machines. Determin should be selected on the basis of rate of return with a MARR of 20% per year.
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- Two numerically controlled drill presses are being considered by the production department of Zunni’s Manufacturing; one must be selected. Comparison data is shown in the table below. MARR is 10%/year. Solve, a. What is the future worth of each drill press? b. Which drill press should be recommended?Old Southwest Canning Co. has determined that any one of four machines can be used in a certain phase of its chili-canning operation. The first costsand annual operating costs (AOC) are estimated below, and all machines have a 5-year life. The MARR is 25% per year. (a) Determine which machine should be selected on the basis of a rate of return analysis. (b) Use a spreadsheet to perform PW analysis of each machine. Compare the machine selections with that of the ROR analysis.Two different copying machines are being considered in your company. The Mortar copier would be purchased while the Xrocks copier would be leased. The company will replace any copier selected at this time after three years (i.e., the planning horizon for this evaluation is three years). The MACRS depreciation recovery period for office equipment is seven years. Assume an income tax rate of 40% and an after-tax MARR of 18% per year. Using the data in the table below, which machine would you recommend?
- A thermoplastic film manufacturer is trying to decide between 5 types of thermoforming molding processes to be added to its molding operation. The estimated costs and revenues are shown below. Compare them on the basis of the IRR method and determine which process should be selected if the company's MARR is 7% per year. Select the best alternative by performing an IRR incremental analysis. Justify your answer.You must recommend one of two machines into an upgraded manufacturing line. You obtain estimates from salespeople from two companies. Salesman A gave the estimates in constant-value dollars, while salesman B provided in future (then-current) dollars. The company's MARR is equal to the real rate of return of 20% per year, and inflation is estimated at 4% per year. Use present worth analysis to determine which machine the engineer should recommend. A B First Cost $140.000 $ 25.000 10 $150.000 $ 43,000 10 Annual Cost Life (years)The Fence Company is setting up a new production line to produce top rails. The relevant data for two alternatives are shown below. Solve, a. Based on MARR of 8%, determine the annual rate of production for which the alternatives are equally economical. b. If it is estimated that production will be 300 top rails per year, which alternative is preferred and what will be the total annual cost?
- In a bio-based material recycling company, the operation managers are considering a twin-screw extruder with a price of 12,000 OMR and another 2,000 OMR will be spent for shipping and installation of the extruder. The estimated net income generated from this machine is 3,500 OMR per year. The extruder will be used for 5 years, and then it will be sold for an estimated market value of 2,500 OMR. The extruder MARCS property class is 5 years. If the effective income tax rate (t) is 40% and the after-tax MARR is 10%. (a) What is the after-tax IRR for this project? (use trial and error procedure and GDS) (b) Should this extruder be purchased by the company?A new manufacturing facility will produce two products, each of which requires a drilling operation during processing. Two alternative types of drilling machines (D1 and D2) are being considered for purchase. One of these machines must be selected. For the same annual demand, the annual production requirements (machine hours) and the annual operating expenses (per machine) are listed in the shown Table. Which machine should be selected if the MARR is 15% per year? Show all your work to support your recommendation. Assumptions: The facility will operate 2,000 hours per year. Machine availability is 80% for Machine D1 and 75% for Machine D2. The yield of D1 is 90%, and the yield of D2 is 80%. Annual operating expenses are based on an assumed operation of 2,000 hours per year, and workers are paid during any idle time of Machine D1 or Machine D2. State any other assumptions needed to solve the problem.To assist the managing director in making a decision, prepare an analysis showing the total cost and the cost per drum for each of the two alternatives given above. Assume that 60,000 drums are needed each year. Which course of action would you recommend to the managing director? Would your recommendation in (1) above be the same if the company’s needs were: (a) 75,000 drums per year or (b) 90,000 drums per year? Show computations to support your answer, with costs presented on both a total and a per unit basis. What other factors would you recommend that the company consider before making a decision?
- Perform a present worth analysis of equal-service machines that have the costs shown on the next page, if the MARR is 10% per year. Revenues for all three alternatives are expected to be the same.A new biomaterial used for prosthetic devices was developed by engineers in the laboratory that requires production equipment to start manufacturing. Two different equipment are considered. Equipment A will have an initial cost of $125,000 and annual cost of $55,000. Equipment B will have an initial cost of $175,000 and an annual cost of $35,000. For 20% MARR which process should be selected. What is the incremental rate of return?Ashley Foods, Inc. has determined that only one of five machines can be used in one phase of its dairy products operation. The first and annual costs are estimated; all machines are expected to have a 4-year useful life. If the MARR is 20% per year, determine which machine should be selected on the basis of rate of return.
