1. Given: Assume i= 8.0% A new tractor costs $200,000. Annual O&M costs and salvage values aregiven below:YearSalvage ValueO&M Cost1$ 35,000.00$ 100,000.002 $38,000.00 $3$ 43,000.00 $4 $90,000.0080,000.0070,000.0050,000.00 $59,000.00 $ 60,000.005 $6 $ 70,000.00S7$ 81,000.00S8 $ 92,000.00 S9$ 104,000.00 $50,000.0040,000.0030,000.0020,000.0010,000.0010 $ 120,000.00 $Find:a. Calculate the NPV for all 10 yearsb. Calculate the EUAC for all 10 yearsc. Plot EUAC vs. Timed. What year should the tractor be retired for the best economic life?

Given information Initial cost 200000 i 8% Year Annual cost Salvage value 0 200000…

1. Given: Assume i= 8.0% A new tractor costs $200,000. Annual O&M costs and salvage values are given below: Year Salvage Value 0&M Cost 1$ 35,000.00$ 100,000.00 2 $ 38,000.00 $ 90,000.00 80,000.00 70,000.00 60,000.00 50,000.00 40,000.00 30,000.00 20,000.00 10,000.00 3$ 43,000.00 $ 4 $ 50,000.00 $ 5$ 59,000.00 $ 6 $ 70,000.00S 7$ 81,000.00 S 8$ 92,000.00S 9$ 104,000.00 S 10 $ 120,000.00o $ Find: a. Calculate the NPV for all 10 years b. Calculate the EUAC for all 10 years c. Plot EUAC vs. Time d. What year shoould the tractor be retired for the best economic life?

1. Given: Assume i= 8.0% A new tractor costs $200,000. Annual O&M costs and salvage values are given below: Year Salvage Value 0&M Cost 1$ 35,000.00$ 100,000.00 2 $ 38,000.00 $ 90,000.00 80,000.00 70,000.00 60,000.00 50,000.00 40,000.00 30,000.00 20,000.00 10,000.00 3$ 43,000.00 $ 4 $ 50,000.00 $ 5$ 59,000.00 $ 6 $ 70,000.00S 7$ 81,000.00 S 8$ 92,000.00S 9$ 104,000.00 S 10 $ 120,000.00o $ Find: a. Calculate the NPV for all 10 years b. Calculate the EUAC for all 10 years c. Plot EUAC vs. Time d. What year shoould the tractor be retired for the best economic life?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. Given: Assume i= 8.0% A new tractor costs $200,000. Annual O&M costs and salvage values are
given below:
Year
Salvage Value
O&M Cost
1$ 35,000.00$ 100,000.00
2 $
38,000.00 $
3$ 43,000.00 $
4 $
90,000.00
80,000.00
70,000.00
50,000.00 $
59,000.00 $ 60,000.00
5 $
6 $ 70,000.00S
7$ 81,000.00S
8 $ 92,000.00 S
9$ 104,000.00 $
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
10 $ 120,000.00 $
Find:
a. Calculate the NPV for all 10 years
b. Calculate the EUAC for all 10 years
c. Plot EUAC vs. Time
d. What year should the tractor be retired for the best economic life?

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