Alpha Electronics

Alpha electronics can purchase a needed service for $90 per unit. The same service can be provided by equipment that costs $100,000 and --

will have a salvage value of $0 at the end of 10 years. Annual operating costs for the equipment will be $7,000 per year plus $25 per unit produced. MARR is 12% per year.

a. Based on a present worth analysis should the equipment be purchased if the expected production is 200 units/year?-($66,099)

b. Based on a present worth analysis should the equipment be purchased if the expected production is 500 units/year?-$44,081

c. Determine the break even value for annual production that will return MARR on the investment in the new equipment.-380