A Manufacturer of Automated Optical Inspection (AOI) Devices Is Deciding

question 11

Essay

A manufacturer of automated optical inspection (AOI) devices is deciding on a project to increase the productivity of the manufacturing processes. The estimated costs for the two feasible alternatives being compared are shown below. Use the ERR method to determine which alternative should be selected if the analysis period is 8 years and the reinvestment rate equals the company's MARR of 4% per year. $$\begin{array} { | l | l | l | } \hline \text { Alternative } & \mathrm { M } & \mathrm { N } \\\hline \text { Initial costs } & \$ 30,000 & \$ 45,000 \\\hline \text { Net annual cash flow } & \$ 4,500 & \$ 7,000 \\\hline \text { Life, years } & 8 & 8 \\\hline\end{array}$$

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Definitions:

Tax Increases

Governmental policy action that raises the amount of taxes on income, property, goods, or services, often to generate revenue for public projects or reduce deficits.

Business Interests

Activities or concerns that are primarily focused on the pursuit of profit and economic growth, often guiding corporate or individual investments and strategies.

Stamp Act

A British law passed in 1765 imposing a tax on all paper documents in the American colonies, which sparked widespread protests and was a major grievance leading up to the American Revolution.

Virginia Assembly

The legislative body of the Colony of Virginia, established in the 17th century, and a precedent for democratic governance in the English colonies.