A manufacturer of hard board and fiber cement sidings and panels purchased new equipment for its new product line. Three alternatives are under consideration. The costs associated with each alternative are given below. Which alternative is most economical to minimize total life cycle costs, if the life of the equipment is estimated to be 7 years and the company operates on average 3800 hours per year? Assume negligible salvage value. $$\begin{array} { | l | l | l | l | }
\hline \text { termative } & & & \
\hline \text { vestment cost, } \$ & 40,000 & 39,000 & 41,000 \
\hline \text { xed cost, } \$ / y e a r & 4700 & 4500 & 4800 \
\hline \text { ariable cost, } \$ / \text { hour } & 240 & 235 & 243 \
\hline
\end{array}$$

Question

A manufacturer of hard board and fiber cement sidings and panels purchased new equipment for its new product line. Three alternatives are under consideration. The costs associated with each alternative are given below. Which alternative is most economical to minimize total life cycle costs, if the life of the equipment is estimated to be 7 years and the company operates on average 3800 hours per year? Assume negligible salvage value. $$\begin{array} { | l | l | l | l | } 
\hline \text { termative } & & & \
\hline \text { vestment cost, } \$ & 40,000 & 39,000 & 41,000 \
\hline \text { xed cost, } \$ / y e a r & 4700 & 4500 & 4800 \
\hline \text { ariable cost, } \$ / \text { hour } & 240 & 235 & 243 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The Answer of A manufacturer of hard board and fiber cement sidings and panels purchased new equipment for its new product line. Three alternatives are under consideration. The costs associated with each alternative are given below. Which alternative is most economical to minimize total life cycle costs, if the life of the equipment is estimated to be 7 years and the company operates on average 3800 hours per year? Assume negligible salvage value. $$\begin{array} { | l | l | l | l | } 
\hline \text { termative } & & & \
\hline \text { vestment cost, } \$ & 40,000 & 39,000 & 41,000 \
\hline \text { xed cost, } \$ / y e a r & 4700 & 4500 & 4800 \
\hline \text { ariable cost, } \$ / \text { hour } & 240 & 235 & 243 \
\hline
\end{array}$$

A Manufacturer of Hard Board and Fiber Cement Sidings and Panels