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BUOL 534
Spring 2013
Final Exam
Due Date: Thursday, April 25, 2013

Directions: Read the information about ATC Corporation and use it to answer each of the following questions. Be detailed and complete in your answers, referring to any appropriate numbers. Use Word to type your answers and use Excel to do any necessary calculations. When you are finished, submit both files using the Drop Box on the iLearn course site (under Lessons) or by e-mail no later than midnight of the due date shown above.

Important Note: The due date shown above cannot be extended. It is based on University requirements for grade submission.

ATC Corporation is a manufacturer of new and replacement parts for the aircraft industry. The company’s major customers are airlines, other aircraft operators (such as charter services), and contract maintenance service providers. Despite the economic slowdown, the company expects its sales to be strong for the several years, since many aircraft operators will be more interested in maintaining and repairing existing planes rather than buying new ones.

At the present time, ATC is considering an upgrade to its manufacturing facility. This will involve replacing several older machines by the purchase and installation of a new, state of the art, computer-controlled metal cutting and shaping machine center made by a German supplier. Estimates of the machine center’s costs and benefits are shown in the table below. Although the machinery should last for at least ten years, the company uses a five-year planning period for equipment of this type (based on depreciation rules and company policy). Since the machine will not be sold at the end of year 5, there is no salvage value to consider.

| Year 0| Year 1| Year 2| Year 3| Year 4| Year 5|
Initial Costs:| | | | | | |
Purchase| -3,600,000| | | | | |
Shipping| -150,000 | | | | | |
Installation| -250,000| | | | | |
Cash Inflows:| | | | | | |...
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