Minimum attractive rate of return

Assignment Help Financial Management

Reference no: EM131450346

A machine that produces a certain piece must be turned off by the operator after each piece is completed. The machine "coasts" for 15 seconds after it is turned off, thus preventing the operator from removing the piece quickly before producing the next piece. An engineer has suggested installing a brake that would reduce the coasting time to 3 seconds.

The machine produces 50,000 pieces a year. The time to produce one piece is 1 minute 45 seconds, excluding coasting time. The operator earns $9 an hour and other direct costs related to the operator are $5 an hour. The brake will require servicing every 507 hours of operation. It will take the operator 30 minutes to perform the necessary maintenance and will require $45 in parts and material. The brake is expected to last 7,500 hours of operation (with proper maintenance) and will have no salvage value.

How much could be spent for the brake if the Minimum Attractive Rate of Return is 10% compounded annually?

Reference no: EM131450346

Questions Cloud

Describe what you feel will be one or two key economic : Describe what you feel will be one or two key economic and social issues to be debated at the 2016 Presidential elections in the United States

Which legal structure-sole proprietorship and partnership : Which legal structure, sole proprietorship, partnership, corporation or a form of partnership or corporation do you think is best for a new business and why.

Write a paper on the file system of your choice : Write a 3 pages (maximum) paper on the file system of your choice that is not FAT32. It must also follow all rules for grammar and spelling.

What is revenue for the firms and what is gross margin : What is revenue for the firms? What is gross margin?

Minimum attractive rate of return : How much could be spent for the brake if the Minimum Attractive Rate of Return is 10% compounded annually?

Nonconstant growth stock valuation : What is the estimated value per share of your firm's stock?

Review papers used to prepare your technology selection : The technology review papers will be used to prepare your technology selection paper for the Analysis of Alternatives exercise later in the course.

What must be the uniform annual sales to make plan : What must be the uniform annual sales to make Plan 1 and Plan 2 equally attractive?

Dicuss the scenario of gender discrimination : A male applies for a position as a server for a restaurant in his hometown.

User Account

All Pages