Alpha Electronics can purchase a needed service for $85 per unit. The same service can be provided by equipment that costs $95,000 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 $15 per unit produced. MARR is 12.5%/year.
What is the future worth of the equipment if the expected production is 200 units/year?
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.