Various Cedar Coating Materials for Use in Homes
Cedar Shakes is a business that produces various cedar coating materials for use in homes. In business production has
problems with one of the hosts it uses. wants to analyze new machine purchase options. Repair of the machine you will be
able to use the machine for another 5 years of work and maintenance costs will be reduced by 15%.
If the new machine is purchased, the new machine It cost $2.5 million and the business will be able to use the new machine
for 10 years. Acquisition of new machines more efficient production will be done and if two workers employ less than
$30,000 per year at the expense of less labor will be tolerated. In the current state, there are no area issues for operating
Although the new machine will take up less space in operation. Finally, 10% (annual) when new machines are purchased
Electricity costs of $20,000 less and maintenance costs of 25% ($50,000 a year) will be reduced. Old machine there is no scrap value.
a. If the machine is repaired and used, the total annual cost of the machine to the operation will be.
b. If a new machine is purchased, the total annual cost of the new machine will be.
c. How your suggestion will be presented to the business according to your calculations. Explain with reasons.