Part & Parcel needs a new manufacturing system. They have been presented with tw
ID: 1193839 • Letter: P
Question
Part & Parcel needs a new manufacturing system. They have been presented with two alternatives for evaluation:
The EZPlace System costs $38013 and has a lifespan of 2 years. Because of energy efficiencies, it will save Part & Parcel $1569 per year. It has a salvage value of $7021. It requires 8 employees to run it at a cost of $48186 per employee per year.
The LuxeMach system costs $56186 and has a lifespan of 3 years. It has a salvage value of $20535. It requires 5 employees to run it at a cost of $48186 per employee per year. It is not as energy efficient as the EZPlace and there is no associated cost savings over the current system.
We are comparing the two alternatives for this question. Part & Parcel uses a MARR of 1% to evaluate potential investments.
Using present worth analysis, what is the present worth of the EZPlace system?
Part & Parcel needs a new manufacturing system. They have been presented with two alternatives for evaluation:
The EZPlace System costs $9 and has a lifespan of 2 years. Because of energy efficiencies, it will save Part & Parcel $6 per year. It has a salvage value of $4. It requires 10 employees to run it at a cost of $51840 per employee per year.
The LuxeMach system costs $53174 and has a lifespan of 3 years. It has a salvage value of $17774. It requires 4 employees to run it at a cost of $51840 per employee per year. It is not as energy efficient as the EZPlace and there is no associated cost savings over the current system.
We are comparing the two alternatives for this question. Part & Parcel uses a MARR of 3% to evaluate potential investments.
Using present worth analysis, what is the present worth of the LuxeMach system?
Explanation / Answer
Ans 1 Year Cashflow MARR Present Worth NPW 0 -38013 1% -$38,013.00 -$787,602.44 1 -383919 1% -$380,117.82 2 -376898 1% -$369,471.62 Ans 2 Year Cashflow MARR Present Worth NPW 0 -53174 3% -$53,174.00 -$623,449.12 1 -207360 3% -$201,320.39 2 -207360 3% -$195,456.69 3 -189586 3% -$173,498.05