13-8 A S40,000 machine will be purchased by a company A whose interest rate is 12%. The installation cost is $10K, and removal costs are insignificant. What is its economic life if its salvage values and O&M costs are as follows? (a) Year 1 2 3 5-10 4 $25K S20K $15K $10K $5K O&M $4K $7.5K $11K $14.5K S+1.5K/year (b) For lives of 6 years or more, an overhaul costing

13-8 A S40,000 machine will be purchased by a company A whose interest rate is 12%. The installation cost is $10K, and removal costs are insignificant. What is its economic life if its salvage values and O&M costs are as follows? (a) Year 1 2 3 5-10 4 $25K S20K $15K $10K $5K O&M $4K $7.5K $11K $14.5K S+1.5K/year (b) For lives of 6 years or more, an overhaul costing

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 31 4) In order to make a replacement decision, a firm calculated the equivalent annual cost of owning an asset as follows: Replacement Period Salvage Value EAC Capital Costs Annual Repair EAC Repair Costs Costs 1 $1420 $1,287 2 $1,102 $1,082 $400 $189 3 $910 $976 S600 $298 4 S795 $812 S800 $437 O a. in 4 years O b. in 3 years Oc.in 1 year O d. in 2 years
A small town is considering two potential alternatives for a garbage collection system. The following cost data has been compiled. If the interest rate is 6%, Compute the AB /AC ratio. Year System A System B 0 -$250,000 -$375,000 1-30 20,000 32,000 30 40,000 50,000 O 1.34 1.09 0.96 ○ 2.27
5. A small branch office of a contracting company is planning to purchase a new laser printer. Three vendors have supplied cost, useful life, and estimated salvage value data, shown in the following table. The MARR is 12%. Investment (first) cost Annual service cost Salvage value Useful life A $800 $180/yr $200 5 years Laser printer B $1,400 $150/yr $825 5 years C $900 $170/yr $100 5 years Draw cash flows for these alternatives. If the expected annual saving in labor is $500 regardless of which machine is purchased, what are the annual equivalent values of these alternatives.
2. A certain company is considering two types of machine for its operation. The data are as follows: Machine A First cost P150,000 Life 4 yrs Salvage value P15,000 Annual operating cost P48,000 Annual taxes P4,200 Annual repairs P7,200 Machine B First cost P200,000 Life 8 yrs P10,000 Salvage value Annual operating cost P32,000 Annual taxes P7,200 Annual repairs P4,200 If money is worth 12% compounded annually, compute the difference of the present worth of the two machines.
5- Year SV O&M 15,000 1000 12,000 1500 9,000 The table above lists salve value (SV) and operating and maintenance (O&M) cost of an asset through 3 years with the initial cost of $20,000. Given MARR is 10%, which of the statements 3 2000 is correct (choose the closest answer)? a) The marginal cost at year 2 is $6,000 and the annual cost (EUAC) through year two is $6,500 b) The marginal cost at year 2 is $6,000 and the annual cost (EUAC) through year two is $7,048 c) The marginal cost at year 2 is $6,500 and the annual cost (EUAC) through year two is $7,048 d) The marginal cost at year 2 is $6,500 and the annual cost (EUAC) through year two is $6,000
A company is deciding whether to lease or buy a new truck. Given the information provided below, if the company finds out the truck maintenance cost is $3000 incurred by the lessor only, and paid at the end of each year. Net Advantage of lease (NAL) Tax CCA $2,500 30% 40% Salvage $2,000 Cost of Debt 10% Useful life time 6 years The Company should (buy / lease) A/ the truck.
20 00:03:12 You and a group of friends have purchased an annual lease at a commercial fishing pond for the last several years. It is possible to renew the lease for up to 5 years. Based on past costs, you calculated the AW values for different lease periods. Current Lease Renewal, years AW Value, $ per year ||1 2 13 ||4 5 -9200 -8100 -8700 -8900 -9500 Another lease option, a few miles further from your home, is available with an economic service life of 7 years and an AW of $-10000. Assuming all future costs remain unchanged, when should you renew the current lease? You value your recreation highly by using a MARR of 25% per year. The current lease should be renewed in 2 years.
Machines that have the following costs are under consideration for a new manufacturing process. Compute the Equivalent Annual Worth with an interest rate of 8%, compounded semiannually. The machine last 4 years First cost $72,000 Semiannual Operating cost: $6,000 Semiannual incomes: $18,000 Salvage value: $9,000 O EAW $7.730 b. EAW $2,285 OCEAW $21,745 Od. EAW $318
An injection-molding machine has a first cost of $1,050,000 and a salvage value of $225,000 in any year. The maintenance and operating cost is $235,000 with an annual gradient of $75,000. The MARR is 10%. What is the most economic life? 13-1 P Maint A Maint G (A/G, 10%, n) Salvage PV of S n EUAC-P EUAC-M EUAC-S EUAC Minimum? 1050000 235000 75000 225000 1 1050000 235000 75000 225000 2 1050000 235000 75000 225000 3 1050000 235000 75000 225000 4 1050000 235000 75000 225000 5 1050000 235000 75000 225000 6 1050000 235000 75000 225000 7 1050000 235000 75000 225000 8 Can you please teach how to calculate these number I don't know how to solve in excel I…
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
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A firm is trying to decide which of two machines to purchase as described in in the table below. Using the interest rate of 9%, use present worth analysis to determine which machine, if either, should be purchased. Show all your work. Machine: A B First Cost: $800 $600 Annual Net Benefit: $130 $230 Salvage Value: $40 $20 Usefil Life (years): 9 3