A large food-processing corporation is considering using laser technology to speed up and eliminate waste in the potato-peeling process. To implement the system, the company anticipates needing Php3 million to purchase the industrial strength lasers. The system will save Php1.2 million per year in labor and materials. However, it will require an additional operating and maintenance costs of Php 250,000, which increases by Php 150,000. The system is expected to have a 10-year service life and will have a salvage value of about Php 200,000. If the company’s MARR is 18%, justify the economics of the project based on the AW method
A large food-processing corporation is considering using laser technology to speed up and eliminate waste in the potato-peeling process. To implement the system, the company anticipates needing Php3 million to purchase the industrial strength lasers. The system will save Php1.2 million per year in labor and materials. However, it will require an additional operating and maintenance costs of Php 250,000, which increases by Php 150,000. The system is expected to have a 10-year service life and will have a salvage value of about Php 200,000. If the company’s MARR is 18%, justify the economics of the project based on the AW method
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A large food-processing corporation is considering using laser technology to speed up and eliminate
waste in the potato-peeling process. To implement the system, the company anticipates needing Php3 million
to purchase the industrial strength lasers. The system will save Php1.2 million per year in labor and materials.
However, it will require an additional operating and maintenance costs of Php 250,000, which increases by
Php 150,000. The system is expected to have a 10-year service life and will have a salvage value of about Php
200,000. If the company’s MARR is 18%, justify the economics of the project based on the AW method
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