After spending Friday morning with his Financial Advisor's, Charles realized that his boss has been calling and texting him asking for the final decision to include in Monday morning presentation to the finance and accounting committee.
Three different alternatives (Flow-122, Flow-155, and Flow-264) are under consideration for improving material flow in a production process. All the alternatives are considered to have the same life of 20 years.
Based on the information provided in the following table (1);
After completing the first analysis, Charles's received a new text: "Sorry! wrong data" suppliers made a mistake and quoted wrong prices for each of the machines prepare analysis with half of the initial cost. Assuming that the initial investment data is corrected (see table 2),
Table 2. Proposal- Improving Material Flow-Revised
Proposal
Initial Investment ($)
Operating Cost, ($/year)
Annual Income ($/year)
Flow-122
-20,000
-2,000
+4,000
Flow-155
-23,000
-1,000
+5,000
Flow-264
-30,500
-500
+8,000
If the alternatives are mutually excusive, which alternative should Charles recommend using the ROR analysis is 20% per year? If the alternatives are independent, which one(s) should be selected if the company MARR is now 15%? (2pts)
After spending Friday morning with his Financial Advisor's, Charles realized that his boss has been calling and texting him asking for the final decision to include in Monday morning presentation to the finance and accounting committee.
Three different alternatives (Flow-122, Flow-155, and Flow-264) are under consideration for improving material flow in a production process. All the alternatives are considered to have the same life of 20 years.
Based on the information provided in the following table (1);
After completing the first analysis, Charles's received a new text: "Sorry! wrong data" suppliers made a mistake and quoted wrong prices for each of the machines prepare analysis with half of the initial cost. Assuming that the initial investment data is corrected (see table 2),
Table 2. Proposal- Improving Material Flow-Revised
|
Proposal |
Initial Investment ($) |
Operating Cost, ($/year) |
Annual Income ($/year) |
|
Flow-122 |
-20,000 |
-2,000 |
+4,000 |
|
Flow-155 |
-23,000 |
-1,000 |
+5,000 |
|
Flow-264 |
-30,500 |
-500 |
+8,000 |
If the alternatives are mutually excusive, which alternative should Charles recommend using the ROR analysis is 20% per year? If the alternatives are independent, which one(s) should be selected if the company MARR is now 15%? (2pts)
