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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
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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
Transcribed Image Text: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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