You want to buy a large scale 3D printer which costs 4,100 TL. The annual mainte

Question

You want to buy a large scale 3D printer which costs 4,100 TL. The annual maintenance cost including 100 new 3D drawings each year is reported to be 100 TL in the brand's website. The best price of a 1 kg white cartridge you could find from a wholesaler is 46 TL whereas the price of a 1 kg colored cartridge is 62 TL regardless of the color. You estimate that the designs you will print each year will consume 12 kg material of which only 40% will be white. To keep up with the pace of the technology, you will change your printer at the end of the 4th year when you will sell it for 3,400 TL. Your minimum attractive rate of return is 10% per year. a) Determine the capital recovery cost of the printer. b) What is the fixed cost per year? c) What is the variable cost per year? d) What is the EUAC of the printer?

Explanation / Answer

Capital recovery cost of the printer = Purchase cost + other costs related to purchase = $4100 TL

Fixed cost per year =Annual maintenance cost = 100 TL

Variable cost per year = Cost of material = (12 x 0.4 x 46) + (12 x 0.6 x 62) = $667.20 TL

EUAC = (NPV x MARR) / (1 - ((1 + MARR) ^ -number of periods))

Net Present value = Sum of the present value of all the cash flows

Present value = Cash flow / ((1 + MARR) ^ number of period)

All the cashflows are negative as they cost however when the printer if sold at the end of the 4th year there is a positive cashflow of $3400. Net cashflow for the 4th year = $3400 - $667.20 - $100 = $2632.8 positive cashflow.

Below calculations have been done following the above formulae

Year Cashflow MARR PV NPV 0 -4100.00 10% -4100.00 -4209.68 1 -767.20 10% -697.45 2 -767.20 10% -634.05 3 -767.20 10% -576.41 EUAC 4 2632.80 10% 1798.24 1,328.03

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