1. A piece of construction equipment was bought 3 years ago for $ 500,000, expected li: of 8 years and a salvage value of $20,000. The annual operating cost for this equipment is $58,000. It now can be sold for $200,000. An alternative piece of equipment can now be bought for $ 600,000, a salvage value of $150,000 and an expected life of 10 years. The annual operating cost for this equipment is $15,000. At MARR= 10% should we replace the old equipment? Use both EAC and P.W.

1. A piece of construction equipment was bought 3 years ago for $ 500,000, expected li: of 8 years and a salvage value of $20,000. The annual operating cost for this equipment is $58,000. It now can be sold for $200,000. An alternative piece of equipment can now be bought for $ 600,000, a salvage value of $150,000 and an expected life of 10 years. The annual operating cost for this equipment is $15,000. At MARR= 10% should we replace the old equipment? Use both EAC and P.W.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

5
Engineering Economics 0018 Please provide a step by step solution using Future Worth Method
Question 5 Cost data of a machine is shown in the following table with an annual rate of 12%. Calculate annual worth at end of year 2. M&O cost Retention Yr. Market Value per year O (First Cost) 55,000 35,000 45.000 20,000 47,500 3 15,000 50,000 2,000 53,500 O 63,256 O 69.289 O 68,476 O 67,854 Question 6 Use same cost data from last question and 12% annual rate of return. Calculate annual worth at end of Year 3. O 65,765 O 64,332 O 67,428 O 66.256 Question 7 Use the same cost data of the machine from the above 2 questions and 12% interest rate per year. What is the ESL of this machine? O 1 O 2 O 3 O 4
Question 7 for th below two machines and based on CC analysis which machine we should select? MARR=10%. Machine A Machine B First cost, $ Annual cost, $/year Salvage value, $ Life, years 25,640 100,000 11,114 7,000 5,483 3 infinite Answer the below question: A- the CC for machine A=
Question 5 Cost data of a machine is shown in the following table with an annual rate of 12%. Calculate annual worth at end of year 2 M&O cost Retention Yr. Market Value per year O First Cost) 55,000 1 35,000 45.000 2 20,000 47.500 3 15,000 50.000 4 2.000 53.500 O 6a256 O 69209 O R476 O 67.854 Question 6 Use same cost data from last question and 12% annual rate of return. Calculate annual worth at end of Year 3. O 66.765 O 64332 O 67.428 O 66256 D Question 7 Use the same cost data of the machine from the above 2 questions and 12% interest rate per year. What is the ESL of this machine? 01 04
In order to make a replacement decision, a firm calculated the equivalent annual cost of owning an asset as follows: EUAC Annual EUAC Replacement Capital Repair Repair Period Costs Costs Costs 1 2 3 4 5 $1,287- $1,082 $400 $189 $976 $600 $298 in 1 year $812 $800 $437 $673 $1,200 $592 When should the company replace the equipment? in 2 years O in 4 years in 5 years in 3 years
2. Three mutually exclusive design alternatives are being considered. The estimated sales and cost data for each alternative are given on the next page. The MARR is 20% per year. Annual revenues are based on the number of units sold and the selling price. Annual expenses are based on fixed and variable costs. Determine which selection is preferable based on AW. State your assumptions. A в Investment cost Estimated units 60,000 20,000 $50,000 18,000 CLA to be sold/year Unit selling price, $/unit Variable costs, $/unit Annual expenses (fixed) Market value Useful life $4.40 $4.10 $1.00 $1.40 $1.15 $15,000 $30,000 $26,000 $20,000 10 years $15,000 10 years B PUBLICATIO 10 years
Who doesn't love food trucks? Imagine you are being offered to invest in a food truck as part of a restaurant business. The truck including equipment costs $100,000, has an expected useful lifespan of 10 years, and the estimated salvage value then is $5,000. The food truck will require a $20,000 overhaul after 6 years of use. The food truck costs $5000 per year to operate and maintain, but it will save the underlying restaurant operator $40,000 per year in labour and lease payments. As you are contemplating the offer you evaluate the economics of this idea... Your cost of borrowing money is 10%. You set yourself an MARR of 14%. What should you do? Invest or not? a) Use a timeline graph to summarize cash outflows and inflows over time. b) Conduct the ERR analysis. Explain each step of your analysis and related assumptions. Report the level of ERR for this proposal and discuss whether or not you (the decision maker) should invest?
. A manager has been presented with two proposals for automating a production process. Proposal A involves an initial cost of $15,000 and an annual operating costof $2,000 per year for the next 4 years. Thereafter, the operating cost is expected to increase by $100 per year. This equipment is expected to have a 10-year life with no salvage value.Proposal B requires an initial investment of $28,000 and an annual operating cost of $1,200 per year for the first 3 years. Thereafter, theoperating cost is expected to increase by $120 per year. This equipment is expected to last for 20 years and will have a $2,000 salvage value. If the company's minimum attractive rate of return is 10%, which proposal should be accepted on the basis of present worth analysis?
v
The Briggs and Stratton Commercial Division designs and manufacturers small engines for golf turf maintenance equipment. A robotics-based testing system with support equipment will ensure that their new signature guarantee program entitled "Always Insta-Start" does indeed work for every engine produced. First cost of equipment AOC per Year Salvage Value Estimated Life Pull System $-1,800,000 $-620,000 $90,000 8 years Push System $-2,500,000 $-640,000 $130,000 8 years Determine the salvage value for the push system that will make the company indifferent to the two systems. Also, MARR = 13% per year. The salvage value for the push system is determined to be $ in $1000 units.
Hand written plz asap i'll upvote