2- The marginal cost for year t is computed as SV, - SV-1+SV¢ • i+ Cost, where SVdenotes salvage value.a) TRUEb) FALSE3- Replacement rule implies replacing the existing asset when the marginal cost of theexisting asset is more than the marginal cost of the new asset.a) TRUEb) FALSE4- Depreciation recapture occurs when the market value of an asset is greater than thebook value.a) TRUEb) FALSE5-Year1SVO&M15,000 100012,000 15009.000232000The table above lists salve value (SV) and operating and mainteriance (O&M) cost of an assetthrough 3 years with the initial cost of $20,000. Given MARR is 10%, which of the statementsis correct (choose the closest answer)?a) The marginal cost at year 2 is $6,000 and the annual cost (EUAC) through year two is$6,500b) The marginal cost at year 2 is $6,000 and the annual cost (EUAC) through year two is$7,048c) The marginal cost at year 2 is $6,500 and the annual cost (EUAC) through year two is$7,048d) The marginal cost at year 2 is S6,500 and the annual cost (EUAC) through year two is$6.000

Marginal cost signifies the supplementary cost accrued in manufacturing an additional unit of a…

2- The marginal cost for yeart is computed as SV, -SV-1 +SV,i+Cost, where SV denotes salvage value. a) TRUE b) FALSE 3- Replacement rule implies replacing the existing asset when the marginal cost of the existing asset is more than the marginal cost of the new asset. a) TRUE b) FALSE 4- Depreciation recapture occurs when the market value of an asset is greater than the book value. a) TRUE b) FALSE 5- Year 1 2 3 I SV O&M 15,000 1000 12,000 1500 9.000 2000 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 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

2- The marginal cost for yeart is computed as SV, -SV-1 +SV,i+Cost, where SV denotes salvage value. a) TRUE b) FALSE 3- Replacement rule implies replacing the existing asset when the marginal cost of the existing asset is more than the marginal cost of the new asset. a) TRUE b) FALSE 4- Depreciation recapture occurs when the market value of an asset is greater than the book value. a) TRUE b) FALSE 5- Year 1 2 3 I SV O&M 15,000 1000 12,000 1500 9.000 2000 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 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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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BlastCo Analytics needs to purchase a new metal shaper. BlastCo's after tax MARR is 12% and the corporate tax rate is 54%. A metal shaper is a CCA Class 8 asset. The remaining data are contained in the table below. Model Flex First Cost Economic Life Annual Net (Years) Savings $100,000 5 Blender $120,000 5 Flextastic $200,000 5 $50,000 $55,000 $75,000 Salvage Value $20,000 $25,000 $100,000
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