Gopher Manufacturing Is Considering Purchasing New Calibration Equipment to Improve

question 3

Essay

Gopher Manufacturing is considering purchasing new calibration equipment to improve the quality of its processes. The equipment has an initial cost of $66,000 and a market value of $52,000 at the end of its useful life of 10 years. Net annual revenue is estimated based on the production and market conditions and is shown below. If the optimistic and pessimistic values each have an estimated 11% chance of occurring, determine whether the equipment should be purchased on the basis of the expected value of AW. Use a MARR of 8% per year. $$\begin{array} { | l | l | l | l | } \hline & \text { Optimistic } & \text { Most likely } & \text { Pessimistic } \\\hline \text { Net annual revenue, } \$ / y e a r & 93,500 & 90,000 & 88,500 \\\hline\end{array}$$

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Definitions:

Frontal Lobe

The part of the brain associated with decision making, problem solving, control of purposeful behaviors, consciousness, and emotions.

Intelligence A

Hebb’s term for innate intellectual potential, which is highly heritable and cannot be measured directly.

Convergent Thinking

A cognitive process in which a person focuses on a single, optimal solution to a problem, contrasting with divergent thinking.

Frontal Lobe Injury

Damage to the frontal part of the brain, affecting mood, behavior, and cognitive functions.