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Question - Williams Auto has a machine that installs tires. The machine is now in need of repair. The machine originally cost $11,000 and the repair will cost $2,000, but the machine will then last two years. The labor cost of operating the machine is $0.85 per tire. Instead of repairing the old machine, Williams could buy a new machine at a cost of $6,000 that would also last two years; the labor cost would then be reduced to $0.65 per tire. Williams expects to install 11,000 tires in the next two years.
Required -
a. Determine the total (two-years) cost for both repairing and replacing the machine.
b. Should Williams repair or replace the machine?
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