A manufacturer of hard board and ?ber cement sidings and panels purchased new eq

Question

A manufacturer of hard board and ?ber cement sidings and panels purchased new equipment for its new product line. Three alternatives are under consideration. The costs associated with each alternative are given below. Which alternative is most economical to minimize total life cycle costs, if the life of the equipment is estimated to be 7 years and the company operates on average 3800 hours per year? Assume negligible salvage value. Ignore the time value of money for this problem. Alternative Investment cost, $ Fixed cost, $/year Variable cost, $/hour A 40,000 4700 240 B 39,000 4500 235 C 41,000 4800 243

Explanation / Answer

39,000 4500 235

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