30. KTC Toy Co. is at present spending P400 000.00 annually for the manual operation of its assembly line. To cut costs, three proposals for automation are being considered. Proposal X has an initial equipment cost of P800 000.00, has salvage value of P75 000.00 at the end of six years and results in 65% savings per year on Operations cost. Proposal Y costs P500 000.00, has a six-year life, a salvage value of P50 000.00 and results in 50% savings per year. Proposal Z has an initial cost of P300 000.00, a life of three years with no salvage value. With this proposal, a similar replacement will be available for P350 000.00 and a 45% savings in operations is realized, Determine the best alternative using annual worth analysis and an MARR of 14%, (Ans. ATX = P63 060.83: ATY= P77 279-13; ATZ= P42 101.86; Best alternative is Proposal Y)
30. KTC Toy Co. is at present spending P400 000.00 annually for the manual operation of its assembly line. To cut costs, three proposals for automation are being considered. Proposal X has an initial equipment cost of P800 000.00, has salvage value of P75 000.00 at the end of six years and results in 65% savings per year on Operations cost. Proposal Y costs P500 000.00, has a six-year life, a salvage value of P50 000.00 and results in 50% savings per year. Proposal Z has an initial cost of P300 000.00, a life of three years with no salvage value. With this proposal, a similar replacement will be available for P350 000.00 and a 45% savings in operations is realized, Determine the best alternative using annual worth analysis and an MARR of 14%,
(Ans. ATX = P63 060.83: ATY= P77 279-13; ATZ= P42 101.86; Best alternative is Proposal Y)
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