Unit 4 Instructor Graded Project

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Directions for Submitting Your Instructor Graded Assignment
You must show your work on all problems.  You may type your answer right into this document.  Total points for project:  45 points. Projects must be submitted as a Microsoft Word document and uploaded to the Dropbox for Unit 4. All Projects are due by Tuesday at 11:59 PM ET of the assigned Unit.  NOTE: Project problems should not be posted to the Discussion threads. Questions on the project problems should be addressed to the instructor by sending an email or by attending office hours. You will be able to come back to the Dropbox and view your graded work or in the Gradebook after your instructor evaluates it. Project

Get started on the assignment by watching the Should I Buy New Equipment Now? video on the link below then answer the following questions. http://media.pearsoncmg.com/ph/esm/chet_cleaves_cbsm9e_12/tools/RealWorldCase_before.htm

The engraving department uses an aging rotary engraver to engrave plaques and trophies. The machine has been reliable, but requires regular maintenance and periodic replacement of parts. Charlie has just found out that this engraver will no longer be supported by the manufacturer. This means that service and parts will be hard to get in the future and if it breaks it could take up to three weeks to get a new machine up and running. They keep this machine running almost 8 hours a day, every day. Each day that the engraver is down will cost around $975 in lost income. If Charlie has to buy a new engraver, it would cost around $25,000. Charlie can get a one-year loan at 12% to buy a new engraver, but he worries that this is a lot of money to spend, especially since the old engraver is still working fine. He has to make a decision. Should he purchase a new engraver now or wait until the old engraver breaks before ordering a new engraver? What you know:

New engraver cost: $25,000
One-year loan cost: 12% interest
Revenue per day from engraving: $975
Profit margin...
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