two potential solutions with comparable To reduce defects on cell phone covers c
ID: 374989 • Letter: T
Question
two potential solutions with comparable To reduce defects on cell phone covers caused by a flame-polishing machine, the team has settled on quality levels. They also want to analyze the present worth of the costs for each process over a three-year study period. Use an interest rate of 1296. Process X has a first cost of $40.000, an operating cost of $4.000 per year, and a $10,000 salvage value after three years Process Y has a first cost of s50.000, an opera ting cost of $2.000 per year, and a $12.000 salvage value after three years. (Round your answer to zero decimal places. Do not include the Part (a) What is the Net Present Worth of Process X? s sign.) (Round your answer to zero decimal places Do not include the Part (b) What is the Net Present Worth of Process Y? s sign.) Part (c) One of these processes must be selected. Based on your net present worth analysis, which process should the team choose? Enter XorExplanation / Answer
Present worth of the process will be calculated as per following:
Present worth = First cost + Operating cost / ( 1 + Interest rate/100) + Operating cost / ( 1 + Interest rate/100)^2 + Operating cost / ( 1 + Interest rate/100)^3 – salvage value
Therefore ,
Present worth of Process X
= 40000 + 4000/ ( 1 +12/100) + 4000 / ( 1 + 12/1000)^2 + 4000/ ( 1 + 12/1000)^3 - 10,000
= 40000 + 3571.42 + 3188.75 + 2847.12 – 10000
= $39607.29 ( $ 39607 ROUNDED TO ZERO DECIMAL PLACE)
Present worth for process Y
= 50,000 + 2000/ ( 1 + 12/100) + 2000/ ( 1 + 12/100)^2 + 2000 / ( 1 + 12/100)^3 – 12000
= 50000 + 1785.71 + 1594.38 + 1423.56 – 12000
= $42803.65 ( $24804 ROUNDED TO ZERO DECIMAL PLACE )
NET PRESENT WORTH FOR PROCESS X = $ 39607
NET PRESENT WORTH FOR PROCESS Y = $ 24804
NET PRESENT WORTH FOR PROCESS X = $ 39607
NET PRESENT WORTH FOR PROCESS Y = $ 24804
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