Considering investing in new printing press

Assignment Help Business Economics

Reference no: EM131092683

A company is considering investing in a new printing press, and is looking at one of two options. The first printing press has an initial cost of $30,000, a salvage value of $2000, and annual operating costs of $1500 per year. Annual revenues from increased production are estimated to be $7000 per year. The estimated life for this printing press is 8 years. The initial cost of the second printing press is $40,000, its salvage value is $9000, and its annual operating costs are $2000 per year. Its annual benefits are estimated to be $7000 per year. The estimated life for this printing press is 16 years. The company’s MARR is 5%.

a. Manually calculate the NPW (net present worth) for the two product lines, assuming each will be replaced with an identical system at the end of its useful life, and the project life is at least 16 years. Which machine, if any, should be chosen in terms of NPW?

b. Manually calculate payback period for these two machines. Based on these results, which alternative should be chosen?

c. Did your answers for parts a and b concur? Which method would you recommend to make your decision for this analysis? Why?

Reference no: EM131092683

Questions Cloud

Find a confidence interval for the true mean time : GB513 - Sampling distributions & Estimation - Given these confidence intervals, would it seem very unusual if another sample of this size were to have a mean of 350.0 megabytes per month?

A multiple regression computer program : An analyst wanted to fit the regression model i = 1, ... , n, by the method of least squares when it is known that ß2 = 4. How can the analyst obtain the desired fit by using a multiple regression computer program?

What is the work done in overcoming friction : What is the work done in overcoming friction when the load is raised through a height of 2.5 m?

Obtain the maximum likelihood estimators : b. Assuming that the Si are independent normal random variables, state the likelihood function and obtain the maximum likelihood estimators of ß1 and ß2. Are these the same as the least squares estimators?

Considering investing in new printing press : A company is considering investing in a new printing press, and is looking at one of two options. The first printing press has an initial cost of $30,000, a salvage value of $2000, and annual operating costs of $1500 per year. Manually calculate the ..

Jason kidd contract extension : ESPN sources say Jason Kidd contract extension is DONE: $18 million over three years AFTER coaching the final season on current deal at $5M.

Compute the temperatures for the nodes : Repeat Problem 3-67 with the inside of the tube exposed to a convection condition with h=40 W/m2 · ?C. Check with an analytical calculation

What would producers prefer the quantity restriction or tax : Suppose market demand for oranges is given by QD = 40 - 2P where QD is quantity demanded and P is the market price. Market supply is given by QS = 4+P where QS is quantity supplied and P is the market price. Equilibrium price is 12 and quantity is 6...

Looking for ways to improve customer satisfaction : A cellular phone company is looking for ways to improve customer satisfaction. They want to select a simple random sample of four stores from their 15 franchises in which to conduct customer satisfaction surveys.

User Account

All Pages