Q4 Cuci Kereta Sdn Bhd is evaluating two alternatives: the purchase of an automatic washing system or a semi-automatic washing system. One person will operate the automatic washing machine. On the other hand, the semi-automatic washing system require two workers to operate the system. Table 4 shows the system information. The company estimate 3,000 cars can be washed per year with expected rate of return of 10% per year Evaluate this option with suitable graph for recommendation to the company whether to purchase an automatic or a semi-automatic washing system. Table 4: System Information Automatic Washing System Semi-automatic Washing System First Cost 110,000 20,000 (RM) Salvage (RM) 25,000 3,000 Life 10 (years) Labour Cost 10 10 (RM per hour per person) Wash Car 12 (units per hour) Maintenance Cost 4,000 for first year and increase 2,000 every year 1,500 (RM per year)

Q4 Cuci Kereta Sdn Bhd is evaluating two alternatives: the purchase of an automatic washing system or a semi-automatic washing system. One person will operate the automatic washing machine. On the other hand, the semi-automatic washing system require two workers to operate the system. Table 4 shows the system information. The company estimate 3,000 cars can be washed per year with expected rate of return of 10% per year Evaluate this option with suitable graph for recommendation to the company whether to purchase an automatic or a semi-automatic washing system. Table 4: System Information Automatic Washing System Semi-automatic Washing System First Cost 110,000 20,000 (RM) Salvage (RM) 25,000 3,000 Life 10 (years) Labour Cost 10 10 (RM per hour per person) Wash Car 12 (units per hour) Maintenance Cost 4,000 for first year and increase 2,000 every year 1,500 (RM per year)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 16E: Covington Pharmacies has decided to automate its insurance claims process. Two networked computer...

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Covington Pharmacies has decided to automate its insurance claims process. Two networked computer systems are being considered. The systems have an expected life of two years. The net cash flows associated with the systems are as follows. The cash benefits represent the savings created by switching from a manual to an automated system. The companys cost of capital is 10 percent. Required: 1. Compute the NPV and the IRR for each investment. 2. Show that the project with the larger NPV is the correct choice for the company.
1) A distribution company is considering three different alternatives to satisfy their customer's demands. Their options are to rent a ready distribution center (D01), Rent and mobilize a center (D02), or outsourcing (OS). The estimate for each method is shown. The lifetime for D01, D02, and OS are 2, 6, and 3 respectively. MARR is 0.08 per year. D01 D02 OS FIRST COST, $ 138,000 962,000 АОС, $ SV, $ 113,000 70,000 138,000 36,000 352,000 a) Draw the cash flow for all of alternatives. b) Which alternative will be selected on the basis of PW calculation? Why? c) If OS increases 20% each year, which alternative will be more economical (PW method)? d) Which alternative will be selected if AW method is used?
Q4 For the past few months, Sunshine Painting Sdn Bhd has been evaluating two alternatives; the purchase of an automatic painting system or a semi-automatic painting system for a car body paint process. Two person will operate the automatic painting machine. However, because of manual material handling, the semi-automatic painting system require four workers to operate the system. Table 4 shows the system information. The company estimate production output is 1,600 units per year with expected rate of return of 12% per year. Evaluate this option considering with suitable graph for recommendation to the company whether to purchase an automatic or a semi-automatic painting system considering Annual Worth Analysis. Table 4: System Information SEMI-AUTOMATIC AUTOMATIC SYSTEM SYSTEM First Cost, RM 50, 000 25,000 Salvage, RM 9,000 4,000 Life, years 10 5 Labour Cost, RM per hour 30 20 Output, units per hour 12 Maintenance Cost, RM per 4,000 first year and increase 1,000 every year 3,000 year
Case Study 2: Success Electronics LLC is planning to introduce a low cost smart phone with attractive features. The market research information suggests that the product should sell 2000 units at RO 30 per unit. The company seeks to make a mark-up of 20% product cost. It is estimated that the lifetime costs of the product will be as follows: Design and development costs RO 5000 Manufacturing costs RO 22 per unit End of life costs RO 7000 Based on the above case, answer the following THREE questions: What is target cost per unit to achieve the desired profit? O a. RO 25 per unit O b. RO 22 per unit Oc. RO 20 per unit O d. RO 24 per unit
Case Study 2: Success Electronics LLC is planning to introduce a low cost smart phone with attractive features. The market research information suggests that the product should sell 2000 units at RO 30 per unit. The company seeks to make a mark-up of 20% product cost. It is estimated that the lifetime costs of the product will be as follows: Design and development costs RO 5000 Manufacturing costs RO 22 per unit End of life costs RO 7000 Based on the above case, answer the following THREE questions: 1-What is target cost per unit to achieve the desired profit? a. RO 24 per unit b. RO 25 per unit c. RO 22 per unit d. RO 20 per unit 2-What is the desired profit per unit? a. RO 6 per unit b. RO 10 per unit c. RO 5 per unit d. RO 15 per unit 3-What is the original lifecycle cost per unit and is the product worth making on that basis? a. RO 29 per unit; The product is not worth making b. RO 28 per unit; The product is not worth making c. RO 23 per…
In the use of unmanned aerial vehicles (UAVS) that will shape the future of UAV applications, an online shopping company wants to purchase a group of UAVS. As cargo drones are a proven technology for the logistics industry to obtain faster, more environmentally friendly service. The installation cost is 16000 TL and will reduce current expenses by 2400 TL per year for eight years. If the MARR Is 10% per year: a) Find the minimum salvage value after elght years that makes the UAVS worth purchasing? b) Find the UAV's IRR If the salvage value is negligible? Use PW for linear interpolation.
You have two machines under consideration for an improved automated wrapping process for Snickers Fun Size candy bars as detailed below. (a) Using an AW analysis, determine which should be selected at i = 15% per year. (b) Assume you want machine D to be selected and are willing to extend its estimated life, if necessary. Perform this analysis to ensure D’s selection using factors or a spreadsheet. Machine C D First cost, $ −40,000 −65,000 Annual cost, $/year −10,000 −12,000 Salvage value, $ 12,000 25,000 Life, years 3 6
ANSWER ALL QUESTIONS A M&M Micro Processors Ltd is in process of purchasing high-tech Equipment for its production of microchips for the electronic industry. In its search, it has gathered the following information about two possible Equipment A and B. Both Equipment will be able to provide benefits over a ten-year period, and each required an investment of $10 000. Management has constructed the following table of estimates of rate of return and probabilities for Pessimistic, most likely and optimistic results. Equipment A Equipment B Rate of Return Rate of Return 11% 9% 18% 18% 22% 25% State of nature Recession Normal Boom I. II. Probability IV. 0.30 0.45 0.25 Table 1. Probability Required: Compute the expected rate of return for each Equipment Compute the variance and standard deviation of the rate of return for each Equipment Coefficient of variation for each Equipment Recommend which Equipment the firm should purchase 0.30 0.45 0.25
Acme Products, Inc. is interested in producing and selling an improved widget. Market research indicates that customers would be willing to pay $90 for such a widget and that 50,000 units could be sold each year at this price. If Acme Products requires a 75% return on sales to undertake production, what is the target cost for the new widget? Select one: O a. $31.50. O b. $67.50. OC. $58.50. Od. $22.50.
Subject: Engineering Economy Topic: Selection in Present Economy The monthly demand for ice cans being manufactured by Mr. Cruz is 3,500 pieces. With a manually operated guillotine, the unit cutting cost is P25.00. If an automatic hydraulic guillotine at a price of P305,000 is being used he will cut by 30% the unit cutting cost. Disregarding the cost of money, how many months will Mr. Cruz be able to recover the cost of the machine if he decides to buy now?
Question: The management of Health Supplement Inc. wants to reduce its labor cost by installing a new machine. Two types of machines are available in the market – machine X and machine Y. Machine X would cost $18,000 where as machine Y would cost $15,000. Both the machines can reduce annual labor cost by $3,000.Required:Which is the best machine to purchase according to payback method?
Q2. Image Solutions operates a printing service for customers with digital cameras. The current service, whichrequires employees to download photos from customer cameras, has monthly operating costs of $7,000 plus $0.40per photo printed. Management is evaluating the desirability of acquiring a machine that will allow customers todownload and make prints without employee assistance. If the machine is acquired, the monthly fixed costs willincrease to $13,000 and the variable costs of printing a photo will decline to $0.08 per photo. (a) Determine the total costs of printing 20,000 and 50,000 photos per month. (b) Determine the monthly volume at which the proposed process becomes preferable to the current process.