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San Diego State University Operations And Supply Chain Management Assignment Help - maintenance expenses


Question - Beryl’s Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance
expenses. It is considering purchasing a machine instead and is comparing two options:
a. Purchase the machine it is currently renting for $150,000. This machine will require $20,000 per
year in ongoing maintenance expenses.
b. Purchase a new, more advanced machine for $250,000. This machine will require $15,000 per year
in ongoing maintenance expenses and will lower bottling costs by $10,000 per year. Also, $35,000 will
be spent upfront in training the new operators of the machine. Suppose the appropriate discount rate
is 8% per year and the machine is purchased today. Maintenance and bottling costs are paid at the
end of each ...Read More

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