Using excel recommended. Currently, Sharp company buys OLED panels from LG and S

Question

Using excel recommended.

Currently, Sharp company buys OLED panels from LG and Samsung to manufacture their TVs. The OLED panels each cost $2,600. You have looked at buying a machine to manufacture the OLED panels that will cost $240,000 and it will take a full-time operator at $32,000 per year in labor and a maintenance cost of $15,000 per year. Making the panels in house will require $160 in materials per panel. There will be a large maintenance overhaul cost in year 5 at $36,000. Your company MARR is 10% and your project life is 10 years, how many panels do you need to manufacture each year to make this project breakeven. Number of OLED Panels per Year

Using excel recommended.

Explanation / Answer

Machine cost = $240,000

Overhaul cost in 5th year = $36,000

PV of overhaul cost = 36000/1.10^5 = 22,353.17

PV of overhaul and machine cost = 22,353.17 + 240,000 = 262,353.17

PV = 262,353.17, N = 10, r = 10%, FV = 0; compute PMT = 42,696.77

Assume number of panel manufactured each year Q

Annual cost = 42,696.77 + 32,000 + 15,000 + 160Q = 89,696.77 + 160Q

Annual saving = 2600Q

For breakeven, 89,696.77 + 160Q = 2600Q

Q = 89,696.77 / (2600 - 160) = 36.760971

It requires 36.76 panel units or 37 units.

Related Questions

Navigate

• Browse (All)
• Browse U
• Subjects

---

---

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