Question: Alpha Electronics can purchase a needed service for $75 per unit. The same service can be provided by equipment that costs $85,000 and that will have a salvage value of zero at the end of 10 years. Annual operating costs for the equipment will be $7,000 per year plus $40 per unit produced. MARR is 15.0%/year.
1. What is the future worth of the equipment if the expected production is 200 units/year? $
2. What is the future worth of the equipment if the expected production is 500 units/year? $
Determine the breakeven value for annual production that will return MARR on the investment in the new equipment units?