A manufacturer considers two methods for producing a circuit board. The board ca

Question

A manufacturer considers two methods for producing a circuit board.
The board can be hand-wired at a $0.98 per unit and annual fixed cost of $1,000.
A printed circuit board can be produced using an equipment costing $18,000 with a service life of 9 years and a salvage value of $1,000. It is estimated that the labor cost for printed circuit board is $0.32 per unit and the processing equipment will cost $450 per year to maintain.
If the interest rate is 13%, how many circuit boards must be produced each year for the 2 methods to break even?

Explanation / Answer

board can be hand-wired at an estimated cost of $0.98 per unit and an annual fixed equipment cost of $1,000

printed circuit equivalent can be produced using equipment costing $18,000 with a service life of 9 years and a salvage value of $1,000

abor cost for the printed circuit board will be $0.32 per unit and that the processing equipment will cost $450 per year to maintain

interest rate is 13%

let production be x

so 1000 +0.98x =18000 -[1000/(1+r)^9] + 0.32*x+ 450*9

r=0.09 , calculate x =thats your answer

plz rate meLIFESAVER

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