Problem 08.023- Determine which robot to select based on incremental rate of returnA process control manager is considering two robots to improve materials-handling capacity in the production of rigid shaft couplingsthat make dissimilar drive components. Robot X has a first cost of $92,000, an annual M&O cost of $31,000, and $44,000 salvagevalue, and it will improve revenues by $96,000 per year. Robot Y has a first cost of $146,000, an annual M&O cost of $28,000, and$47,000 salvage value, and it will increase revenues by $129,000 per year. The company's MARR is 19.00% per year, and it uses a 3-year study period for economic evaluations. Calculate the incremental ROR, and identify the robot the manager should select. (Roundthe final answer to three decimal places.)The incremental ROR is%.The manager should select robot Y

Incremental rate of return refers to the return that is earned on the higher of the cash flow of…

Answered: A process control manager is…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A process control manager is considering two robots to improve materials-handling capacity in the production of rigid shaft couplings that make dissimilar drive components. Robot X has a first cost of $92,000, an annual M&O cost of $31,000, and $40,000 salvage value, and it will improve revenues by $96,000 per year. Robot Y has a first cost of $146,000, an annual M&O cost of $28,000, and $47,000 salvage value, and it will increase revenues by $124,000 per year. The company's MARR is 37% per year, and it uses a 3-year study period for economic evaluations. Calculate the incremental ROR, and identify the robot the manager should select. The incremental ROR is %. The manager should select robot: (Click to select) (Click to select) Y
A process control manager is considering two robots to improve materials handling capacity in the production of rigid shaft couplings that mate dissimilar drive components. Robot X has a first cost of $84,000, an annual M&O cost of $31,000, a $40,000 salvage value, and will improve revenues by $96,000 per year. Robot Y has a first cost of $146,000, an annual M&O cost of $28,000, a $47,000 salvage value, and will increase revenues by $119,000 per year. The company’s MARR is 15% per year and it uses a 3-year study period for economic evaluations. Which one should the manager select (a) on the basis of ROR values, and (b) on the basis of the incremental ROR value? (c) Which is the correct selection basis? Perform the analysis by hand or spreadsheet, as instructed.
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A company that manufactures amplified pressure transducers wishes to decide between the machines shown - variable speed (VS) and dual speed (DS). Determine the range of Ai*, incremental ROR. (i.e. 5%-6%). First cost, $ AOC, $ per year Overhaul in year 3, $ Overhaul in year 4, $ Salvage value, $ Life, years VS -260,000 -230,000 -40,000 55,000 6 O a Ai* vs-ps = 19% - 20% Ob.Ai* vs os = 4%-5% OcAi* vs os = 10% -11% Ⓒd. Ai vs Ds = 17%-18% DS -215,000 -235,000 -24,000 14,000 6
A company that manufactures amplified pressure transducers wishes to decide between the machines shown - variable speed (VS) and dual speed (DS). Determine the range of Ai*, incremental ROR. (i.e. 5%-6%). First cost, $ AOC, $ per year Overhaul in year 3, $ Overhaul in year 4, $ Salvage value, $ Life, years Vs -260,000 -230,000 -40,000 55,000 6 a. Ai*vs-ds 19% - 20% O b. Ai* vs.Ds = 10%-11% OC.Ai* *VS-Ds = 4%-5% O d. Ai* vs-Ds = 17% -18% VS-DS DS -215,000 -235,000 -24,000 14,000 6
Consider VM * D' * s recent investment in the 3D MRI equipment. While this technology allows the Medical Imagining Center to stay at the forefront of technological developments in the field, it is currently underutilized. How would you propose to treat the new equipment from a costing system standpoint? Let's assume that the operating data of the new 3D MRI machine is the following: Initial Cost = $5, 000, 000 Useful life = 10 years Residual value = 0 Overhead costs (other than depreciation) per year =\$ 250000 Capacity = 2,500 hours / year Current utilization = 500 hours / year
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?
Calculate the profitability of the following proposal using Return on investment method Proposal I Automatic machine Cost 420000 Estimated life 6.5 years Estimated sales p.a 175000 Cost : Material 60000 Labor 22000 Variable overheads 14000 a. 16.53% b. All the options are wrong c. 3.42% d. 4.62%
A thermoplastic film manufacturer is trying to decide between 8 types of thermoforming molding processes to be added to its molding operation. The estimated costs and revenues are shown below. Compare them on the basis of the IRR method and determine which process should be selected if the company's MARR is 7% per year. B C D E F G Initial Costs $13,000 $12,00o $11,000 $12,500 $16,000 $26,000 $19,500 Annual expenses $6,550 $9,125 $7,000 $8,000 $7,000 $11,000 $12,000 $13,000 Annual revenue $9,000 $10,000 $9,500 $13,500 $16,000 $16,200 Lifetime(years) 9. 9 9. 9. IRR 11.54% 6.88% 9.17% 11.81% 5.24% 4.86% 6.48% Perform an IRR-incremental analysis to find the best alternative.
You need to select a machine for the robotized welding process at your factory. There are two machines in market that can do this job, machine A and machine B. Machine A: First cost is $63,000 , Annual Operating Cost is $4,000, and Salvage value of $15,000 with useful life of 3 years. If the life of machine B is 9 years, the NPV of machine A needed for the sake of comparison at MARR 15% per year is closest to:

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