Question

A manager must decide which type of machine to by A, B or C. Machine cost (per individual machine)are as follows

Machine.

A $50000

B $40000

C $70000

Product forecast and processing times on the machines are as follows

Annual demand A. B. C

1. 27000 1 1. 1
2. 13000 6 3. 3
3. 28000 3. 2. 2

4. 29000 3. 3. 6.

Assume that only purchasing cost are being considered. Compute the total processing time required for each machine type to meet demand, how Many of each machine type would be needed and the resulting total purchasing cost for each machine type. The machines will operate 8 hours a day, 200 days a year ( enter total processing time as hole numbers. Round up machine quantities to the next higher hole number. Compute total processing cost using these rounded machine quantities. Enter the resulting total purchasing cost as a whole number. Omit the $ sign

Total processing time in minutes per machine

A.

B

C.

Number of each machine needed and total purchasing cost

A.

B

C.

B. Consider the additional information: the machines differ in terms of hourly operating cost: The A machines have an hourly operating cost of $12 each. B machine have an hourly operating cost of $15 each and c machines have an hourly operating cost of $13 each. What would be the total cost associated with each machine option, include both the initial purchasing cost and annual annual operating cost incurred to satisfy demand? (use rounded machine quantities from part A, round your final answers to the nearest whole number)

 

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Question

How do I calculate net cash flow??
PC Shopping Network may upgrade its modem pool. It last

upgraded 2 years ago, when it spent $140 million on equipment with an assumed life of 5 years and an assumed salvage value of $20 million for tax purposes. The firm uses straight-line depreciation. The old equipment can be sold today for $100 million. A new modem pool can be installed today for $210 million. This will have a 3-year life and will be depreciated to zero using straight-line depreciation. The new equipment will enable the firm to increase sales by $28 million per year and decrease operating costs by $14 million per year. At the end of 3 years, the new equipment will be worthless. Assume the firm’s tax rate is 35% and the discount rate for projects of this sort is 9%

 

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