What range of annual production volume values is each method

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The XYZ Company is faced with three proposed methods for making one of their products. Method A involves the purchase of a machine for $100,000. It will have a seven-year life, with a zero salvage at that time. Using Method A involves additional costs of $5.00 per unit of product produced per year. Method B involves the purchase of a machine for $200,000. It will have a salvage value of $40,000 if disposed of after seven year. Using Method B involves additional costs of $3.00 per unit of product produced per year. Method C involves the purchase of a machine for $160,000. It will have a salvage value of $40,000 if disposed of after seven years. Additional costs of $4.00 per unit of product produced per year arise when Method C is used. Ignoring the time value of money (discounted cas flow), for what range of annual production volume values is each method preferred? Clearly show the method you have used, and state and justify any assumptions that you have made. Discuss any significant risks that are associated with your conclusion.

Reference no: EM131081734

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What range of annual production volume values is each method : The XYZ Company is faced with three proposed methods for making one of their products. Method A involves the purchase of a machine for $100,000. It will have a seven-year life, with a zero salvage at that time. what range of annual production volume ..

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