finance and accounting department

finance and accounting department 

Written Assignment Unit 6

Instructions for submission Submit a written paper which is 3-4 pages in length (no more than 4-pages), exclusive of the reference page. Your paper should be double spaced in Times New Roman (or its equivalent) font, which is no greater than 12 points in size. The paper should cite at least three sources in APA format. One source can be your textbook.

Please describe the circumstances of the following case study and recommend a course of action. Explain your approach to the problem, perform relevant calculations and analysis, and formulate a recommendation. Ensure your work and recommendation are thoroughly supported.

Case Study: A manufacturing company is evaluating two options for new equipment to introduce a new product to its suite of goods. The details for each option are provided below: 

Option 1

 • $65,000 for equipment with useful life of 7 years and no salvage value. 

• Maintenance costs are expected to be $2,700 per year and increase by 3% in Year 6 and remain at that rate. 

• Materials in Year 1 are estimated to be $15,000 but remain constant at $10,000 per year for the remaining years.

 • Labor is estimated to start at $70,000 in Year 1, increasing by 3% each year after