Quiz8_Spring09 - for delivery to the printer. A total of...

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CHEE 5369 / 6369 Quiz # 8 (closed book) Tuesday March 24, 2009 A Yellow Pages directory company must decide whether it should compose the ads for its clients in - house or pay a production company to compose them. To develop the ads in - house, the company will have to purchase computers, printers and other peripherals at a cost of $12,000. The equipment will have a useful life of 3 years, after which it will be sold for $2,000 . The employee who creates the ads will be paid $45,000 per year. In addition, each ad will have an average cost of $8 to prepare
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Unformatted text preview: for delivery to the printer. A total of 4000 ads per year ~ are required. Alternatively, the company can outsource ad development at a fee of $20 per ad regardless of the quantity. The current interest rate is 8% per year. What is the breakeven amount of ads? And which alternative is more economical at the required rate of 4000 ads per year? ML-1 . 1 ' ) 1 00 [ ", -r ~cz-a J-vC--g f " < q J. c \ ~-:: 8 % fe . r v o c . . ( f / / '2 / " ) )-r...
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This note was uploaded on 04/13/2011 for the course CHEE 5369 taught by Professor Alim during the Spring '11 term at University of Houston.

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Quiz8_Spring09 - for delivery to the printer. A total of...

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