Please provide the answers inclear way
A company is planning to install a new automated plastic-moldingpress. Four different presses are available. The initial capitalinvestments and annual expenses for these four differentalternatives are:
| Press |
P1 | P2 | P3 | P4 |
Capital Investment | $24,000 | $30,400 | $49,600 | $52,000 |
Annual expenses | $31,200 | $29,100 | $25,200 | $22,900 |
Press life (years) | 5 | 5 | 5 | 5 |
Assume each press has the same output capacity of 150,000 unitsper year, has no salvage value at the end of its useful life, andthe minimum attractive rate of return is 10%. The selling price foreach plastic molded unit is $0.425 per unit.
a) Which press should you purchase if 150,000 nondefective unitsper year are produced by each press and all units can be sold?
b) Which press should you purchase is each press still produces150,000 units per year, but the estimated unit reject rate is 7.4%for P1, 1.3% for P2, 2.6% for P3, and 4.6% for P4, where allnondefective units are sold but the defective units have no marketvalue?
