Given Problem:A manufacturing plant wishes to buy a new equipment so the purchasing department did some research on different types of this equipment. In the monthly meeting, the purchasing department presented a report about the two types of equipment that they have found. Pertinent data are as follows: Туре АТуре ВFirst costP250,000P350,000Annual operating cost30,00022,000Annual labor cost52,00034,000Insurance and property taxes3%3%Labor/Payroll taxes4%4%Estimated life1010If the minimum required rate of return is 18%,1. What is the annual worth of Type A? [Select]2. What is the annual worth of Type B? [ Select]3. Which machine should be selected? [ Select]>

Given that; A company is considering two types of equipment for its manufacturing plant. The…

Answered: Given Problem: A manufacturing plant…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Given Problem:

A manufacturing plant wishes to buy a new equipment so the purchasing department did some research on different types of this equipment. In the monthly meeting, the purchasing department presented a report about the two types of equipment that they have found. Pertinent data are as follows:

Туре А
Туре В
First cost
P250,000
P350,000
Annual operating cost
30,000
22,000
Annual labor cost
52,000
34,000
Insurance and property taxes
3%
3%
Labor/Payroll taxes
4%
4%
Estimated life
10
10
If the minimum required rate of return is 18%,
1. What is the annual worth of Type A? [Select]
2. What is the annual worth of Type B? [ Select]
3. Which machine should be selected? [ Select]
>

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