An Engineer- To- Order Manufacturer Is Considering Purchasing New Equipment

question 5

Short Answer

An engineer- to- order manufacturer is considering purchasing new equipment for its film adhesive assembly. The initial cost of the equipment is $12,100 and annual maintenance costs are estimated to be $185,000 per year. Annual operating costs will be in direct proportion to the hours of use at $12 per hour. The expected annual revenue is $220,000 per year. The equipment has a salvage value of $500 at the end of 5 years. What is the maximum annual hours of use for which the equipment is economically justified? Use straight- line depreciation, an effective tax rate of 39%, and an after- tax MARR of 16% per year.

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Definitions:

Sigmund Freud

An Austrian neurologist known for founding psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.

B. F. Skinner

An influential American psychologist known for developing the theory of behaviorism and for his work on operant conditioning.

Theoretical Diverse

The diversity in theories within a field, signifying a range of perspectives, conceptual models, and explanatory mechanisms.

Theories

Systematically organized principles or explanations about phenomena or behaviors in the natural or social world.