23. Two options are available for painting your house: (1) oil-based painting which costs P5,000 and (2) water-based painting which costs P3,000. The estimated lives are 10 years and 5 years respectively. For either option, there is no salvage value at the end of respective service life. Assume that you will keep and maintain the house for 10 years. If your personal interest rate is 10% per year, which of the following statements is correct? A. On annual basis, Option 1 will cost about P850.00 B. On annual basis, Option 2 is about P22.00 cheaper than Option 1 C. On annual basis, both options cost about the same. D. On annual basis Option 2 will cost about P820.00

23. Two options are available for painting your house: (1) oil-based painting which costs P5,000 and (2) water-based painting which costs P3,000. The estimated lives are 10 years and 5 years respectively. For either option, there is no salvage value at the end of respective service life. Assume that you will keep and maintain the house for 10 years. If your personal interest rate is 10% per year, which of the following statements is correct? A. On annual basis, Option 1 will cost about P850.00 B. On annual basis, Option 2 is about P22.00 cheaper than Option 1 C. On annual basis, both options cost about the same. D. On annual basis Option 2 will cost about P820.00

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

A company owns a fleet of trucks and operates its own maintenance shop. A particular type of truck, generally used for five years, has an initial cost of $75,000 and a salvage value of $15,000. Maintenance cost is $5,000 per year, and it increases by $2000 yearly. Assuming interest at 10%, find the equivalent annual cost of owning and maintaining the truck.
not use ai please
The cost of a fully installed new equipment is $ 15,000 and the service lifeat the end, the scrap value will be $ 2,000.If the useful life is 10 years and the annual compound interest is 6%What is the capitalized cost of the equipment?
Question 4 Consider a proposal to enhance production of tortillas en a taqueria. The new machine is estimated to cost $30 million and will incur an additional $1 million per year in maintenance costs. The machine will produce annual savings of $6 million each year. The Minimum acceptable rate of return (MARR) is 11% per year, and the study period is five years at which time the machine will be obsolete (worthless). What is the maximum (minimum) value of maintenance cost that reverse your decision? Write 4 decimals
am. 117.
Your firm is thinking about investing $300,000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $39,000 in year one and then increasing by $13,000 more each year thereafter, Relevant expenses will be $20,000 in year one and will increase by $10,000 per year until the end of the cell's nine-year life. Salvage recovery at the end of year nine is estimated to be $10,000. What is the annual equivalent worth of the manufacturing cell if the MARR is 10% per year? How sensitive is the annual worth to ± 10% changes in the MARR? Are changes in the MARR really a significant consideration in this problem? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 9% per year. E Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11% per year. Find Annual Equivalent…
Your firm is thinking about investing $300,000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $33,000 in year one and then increasing by $11,000 more each year thereafter. Relevant expenses will be $20,000 in year one and will increase by $10,000 per year until the end of the cell's seven-year life. Salvage recovery at the end of year seven is estimated to be $11,000. What is the annual equivalent worth of the manufacturing cell if the MARR is 8% per year? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 8% per year. The annual equivalent worth of the manufacturing cell is $. (Round to the nearest dollar.)
The maintenance of a machine in a manufacturing plant currently costs a company $8,000 every year (paid at the end of each year) with the cost increasing by $1,000 each subsequent year. Because of this, the plant manager is considering replacing this machine with a newer one which would cost $20,000 to purchase today, and then $4,000/year increasing by $30Ó in each year to maintain (also paid at the end of the year). If the company's MARR is at 8% per year compounded annually, what would be the discounted payback period (in years) for this proposed investment? 4 6. 7
A company is considering an investment (at time = 0) in a machine that produces large plastic boxes. The cost of the machine is 43,118 dollars with zero expected salvage value. Annual production in units during the 3-year life of the machine is expected to be (starting at time = 1) 4,213, 8,486, and 12,468. The sale price per unit of the plastic boxes is 12 dollars in year one, and then expected to increase by 9% per year. Production costs per unit will be 5 dollars in year one, and then expected to increase by 3% per year. Depreciation on the machine is 10,192 dollars per year, the tax rate is 40% and the minimum acceptable rate of return is 6% percent. Calculate the net present value of this investment. Assume all flows are at the end of each year. (note: round your answer to the nearest cent, and do not include spaces, currency signs, plus or minus signs, or commas)