12.9 A three-year maintenance contract for a local computer network costs $4000. The network isexpected to be needed for fifteen years and the maintenance contract will be purchased forthe same price at the beginning of every three year period. If the interest rate is 6%, thepresent equivalent cost of the maintenance contract is nearest:(A) $12,950(B) $14,500(C) $15,400(D) $16,000

Cash flow:The sum of the total money is represented in the diagram. It represents the magnitude and…

Answered: 12.9 A three-year maintenance contract…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6
Can some one please help me to answer the following question. PLEASE AND THANK YOU!!!!
A consulting engineering firm is considering two models of SUVs for the company principals. A GM model will have a first cost of $36,000, an operating cost of $4000, and a salvage value of $15,000 after 3 years. A Ford model will have a first cost of $32,000, an operating cost of $3100, and also have a $15,000 resale value, but after 4 years. (a) At an interest rate of 15% per year, which model should the consulting firm buy? Conduct an annual worth analysis. (b) What are the PW values for each vehicle?
5
Required information Eight years ago, Ohio Valley Trucking purchased a large-capacity dump truck for $108,000 to provide short-haul earth- moving services. The company sold it today for $45,000. Operating and maintenance costs averaged $8,900 per year. A complete overhaul at the end of year 3 costs an extra $3600 Calculate the annual cost of the truck at /-8% per year. The annual cost of the truck is $- per year.
A furniture company intends to evaluate whether they want to stick with th equipment (defender) or replace them with the new productive equipment (challenger). The details of the cost required are shown in Table Q3(b) below. Use an interest rate of 20% per year. Items Initial cost eight (8) years ago (RM) Market value (RM) Yearly handling cost (RM) Life time (year) Salvage value (RM) Defender Challenger 450,000 25,000 700,000 160,000 70,000 5 10 50,000 Use the replacement analysis to justify whether the existing equipment is required to be replaced with the new equipment. (ii) If the existing equipment (defender) could be sold in international market, determine how much is the minimum value of the defender so that the challenger could replace the defender now?
How much will Sonja have in a savings account 12 years from now if she deposits $3000 now and $5000 four years from now? The account earns interest at a rate of 10% per year. (a) $10,720 (b) $9,415 (c) $20,133 (d) $15,630 (e) Greater than $22,000
For the cash flows shown, determine the incremental cash flow between machines B and A for (a) year 0, (b) in year 3, and (c) in year 6. Machine First Cost, $ АОС, $/year Salvage value, $ 3,000 Life, years B -15,000 -25,000 -1,600 -400 6,000 3 4 O (a) = -10000 (b) = -1800 (c) = 1200 %3D !3! O (a) = -10000 (b) = 13200 (c) = 4200 !3! %3! O (a) = -10000 (b) = 13200 (c) =6000 %3! %3D O (a) = -10000 (b) = 13200 (c) = 13200 %3D
Mechanical engineer at Company B is considering five equivalent projects, some of which have different life expectations. Salvage value is nil for all alternatives. Assuming that the company’s MARR is 13% per year, determine which should be selected (a) if they are independent, and (b) if they are mutually (c) Explain why your selection in part (b) is correct. First Cost, $ Net Annual Income, $/Year Life, Years A -20,000 +5,500 4 B −10,000 +2,000 6 C −15,000 3,800 6 D −60,000 +11,000 12 E −80,000 +9,000 12
Use the table to determine the discounted payback period using 7% per yearPeriod (n) Cash flow (An) Cost of funds (7%) Ending balance 0 -85,000 0 - 85,000 1 15,000 2 25,000 3 35,000 4 45,000 5 45,000 6 35,000
4
A consulting engineering firm is considering two models of SUVs for the company principals. A GM model will have a first cost of $36,000, an operating cost of $4000, and a salvage value of $15,000 after 3 years. A Ford model will have a first cost of $32,000, an operating cost of $3100, and also have a $15,000 resale value, but after 4 years. (a) At an interest rate of 15% per year, which model should the consulting firm buy? Conduct an annual worth analysis. (b) What are the PW values for each vehicle? 10 16 -22)

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