Principles of Corporate Finance

Fluctuating Load Factors

PV operating cost of two machines ................................$ 26 , 000

PV operating cost per pachine 1 ,000/.10 $10,000 6,000 1 , 000 /.10 $16,000

Operating cost per machine 2 500 $1,000 1 1 , 000 $1,000

Capital cost pe machine 0 $ 6 , 000

Annual output per machine 500 units 1,000 units

One Old Machine One New Machine

= + =

× = × =