Answer Happy

A company is planning to install a new automated plastic-molding press. Four different presses are available. Assume that each press has the same output capacity (130,000 units per year), but the estimated reject rate is different for each alternative. The data for the four presses are given below in detail. Table 1: Cash-flows of four presses Cash-Flows Capital Investment ($) Useful Life (years) P1 24000 5 P4 52000 5 Presses P2 P3 30400 49600 5 5 Annual Expenses (S) 2720 4800 24000 16800 1800 2600 608 992 0.3 2.6 Power Labor Maintenance Property Taxes and Insurance Reject Rate (%) 2720 26400 1600 480 8.4 5040 14800 200 1040 5.6 The life of each press (study period) is five years as given above in the table 1. All four presses have no market value at the end of their useful life. By assuming MARR equals to the last two numbers of your student's ID, determine the following sub- questions: a) If the selling price is $0.50 per good unit and rejected units can be sold as scrap for $0.10 per unit, which press should be chosen? (Use PW-Method)