1. The following alternatives will be compared based on an 8% interest rate.MachineFirst costAnnual MaintenanceSalvage ValueUseful LifeA5,0005006005B10,0002001,00012What is the Equivalent Uniform Annual Cost (EUAC) of machine A?A. 1550C. 1274B. 1650D. 18172. A manufacturer makes and sells certain spare parts at PHP5.00 per pc. The volume of sales per year is500,000 units. The fixed expense per year is PHP 800,000. Compute the cost per unit to break even.A. 500B. 1.60C. 7.10D. 3.403. Busilak City is considering a new PHP 5M street cleaner. The new machine will operate at a savings ofPHP 60,000 per day compared to the present equipment. Assume the MARR is 12% and the machine lifeis 10 years with zero resale value at the time. How many days per year must the machine be used tojustify the investment? MARR is the rate of return.A. 33B. 15C. 17D. 304. A fixed capital investment of P10,000,000.00 is required for a proposed manufacturing plant and anestimated working capital of P2,000,000.00. Annual depreciation is estimated to be 10% of the fixedcapital investment. Determine the rate of return on the total investment if the annual profit isP2,500,000.A. 21.36%B. 21.87%C. 20.83%D. 22.98%5. A telephone company purchased a microwave equipment for P6 Million with a salvage value ofP600,000.00 over a period of 5 years and pay lump sum of P400,000.00 for maintenance cost. Minimumattractive rate of return is 16% annually. Compute the annual cost of investment of purchasing themicrowave equipment.A. P1,592,362.54B. P1,695,452.87C. P1,803,374.41D. P1,346,121.256. A contractor can buy dump trucks for P800,000.00 each(surplus) or rent them for P1,189 per truck perday. The truck has a salvage value of P100,000 at the end of its useful life of 5 years. Annual cost ofmaintenance is P20,000.00. If money is worth 14% per annum, determine the number of days per year atruck must be used to warrant the purchase of the truck.A. 200B. 199C. 145D. 102

Machine AFirst cost=5000Annual cost=500Salvage value=600Life=5 yearsi=8%Thank you for the question.…

1. The following alternatives will be compared based on an 8% interest rate. Machine A First cost 5,000 Annual Maintenance 500 Salvage Value 600 Useful Life 5 B 10,000 200 1,000 12 What is the Equivalent Uniform Annual Cost (EUAC) of machine A? A. 1550 B. 1650 C. 1274 D. 1817

1. The following alternatives will be compared based on an 8% interest rate. Machine A First cost 5,000 Annual Maintenance 500 Salvage Value 600 Useful Life 5 B 10,000 200 1,000 12 What is the Equivalent Uniform Annual Cost (EUAC) of machine A? A. 1550 B. 1650 C. 1274 D. 1817

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

100%

1. The following alternatives will be compared based on an 8% interest rate.
Machine
First cost
Annual Maintenance
Salvage Value
Useful Life
A
5,000
500
600
5
B
10,000
200
1,000
12
What is the Equivalent Uniform Annual Cost (EUAC) of machine A?
A. 1550
C. 1274
B. 1650
D. 1817
2. A manufacturer makes and sells certain spare parts at PHP5.00 per pc. The volume of sales per year is
500,000 units. The fixed expense per year is PHP 800,000. Compute the cost per unit to break even.
A. 500
B. 1.60
C. 7.10
D. 3.40
3. Busilak City is considering a new PHP 5M street cleaner. The new machine will operate at a savings of
PHP 60,000 per day compared to the present equipment. Assume the MARR is 12% and the machine life
is 10 years with zero resale value at the time. How many days per year must the machine be used to
justify the investment? MARR is the rate of return.
A. 33
B. 15
C. 17
D. 30
4. A fixed capital investment of P10,000,000.00 is required for a proposed manufacturing plant and an
estimated working capital of P2,000,000.00. Annual depreciation is estimated to be 10% of the fixed
capital investment. Determine the rate of return on the total investment if the annual profit is
P2,500,000.
A. 21.36%
B. 21.87%
C. 20.83%
D. 22.98%
5. A telephone company purchased a microwave equipment for P6 Million with a salvage value of
P600,000.00 over a period of 5 years and pay lump sum of P400,000.00 for maintenance cost. Minimum
attractive rate of return is 16% annually. Compute the annual cost of investment of purchasing the
microwave equipment.
A. P1,592,362.54
B. P1,695,452.87
C. P1,803,374.41
D. P1,346,121.25
6. A contractor can buy dump trucks for P800,000.00 each(surplus) or rent them for P1,189 per truck per
day. The truck has a salvage value of P100,000 at the end of its useful life of 5 years. Annual cost of
maintenance is P20,000.00. If money is worth 14% per annum, determine the number of days per year a
truck must be used to warrant the purchase of the truck.
A. 200
B. 199
C. 145
D. 102

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