A company is considering two methods for obtaining a certain part. Method A will

Question

A company is considering two methods for obtaining a certain part. Method A will involve purchasing a machine for $55,000 with a life of 5 years, a $1, 800 salvage value, and a fixed annual operating cost of $9,000. Additionally, each part produced by the method will cost $11. Method B will involve purchasing the part from a subcontractor for $24 per part. At an interest rate of 10% per year, determine the number of parts per year required for the two methods to break even. (Enter your answer as a number without the dollar $ sign.)

Explanation / Answer

IF X is the number of parts required per year, the breakeven equation in terms of annual dollar is
55000(A/P,10%,5)- 1800(A/F,10%,5) + 9000 + 11x =24x
   55000(0.2638)-1800(0.1638)+9000+11x=24x
23461.66=13x
   x=1804.74 answer

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.