Carlson Manufacturing Has Some Equipment That Needs to Be Rebuilt

question 99

Multiple Choice

Carlson Manufacturing has some equipment that needs to be rebuilt or replaced. The following information has been gathered relative to this decision: Carlson uses the total cost approach to net present value analysis and a discount rate of 12%. Regardless of which option is chosen, rebuild or replace, at the end of five years Carlson Manufacturing will have no future use for the equipment. If the new equipment is purchased, the present value of the annual cash operating costs associated with this alternative is:

• A)($28,840)
• B)($19,160)
• C)($14,420)
• D)($36,050)

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Definitions:

Value Engineering (VE)

A systematic method to improve the "value" of goods or products and services by using an examination of function. Value, in this context, can be defined as the ratio of function to cost.

Value Analysis (VA)

is a method to improve product value by examining its function, design, and the cost of components, aiming for cost reduction while maintaining quality.

FinTech Firms

Companies that innovate and provide technological solutions for the finance sector, often disrupting traditional banking services and methods.

Process Technology Innovation

The introduction of new or significantly improved technologies or methods in the production process to enhance efficiency, quality, or environmental performance.