3) A certain warehouse is worth P700,000. The average value of the merchandise in the warehouse is P600,000. The annual insurance rate on the warehouse is 1% and the merchandise stored in the warehouse is 0.9%. A proposal for the installation of a fire sprinkler system is being considered. The system will cost P70,000 and will affect a savings of 50% in both insurance premiums. Annual maintenance cost is estimated to be P1,500 and annual taxes of P600 for the sprinkler system. The owners of the warehouse demand that the investment in such equipment be written-off within 10 years. Invested capital can be expected to earn a minimum return of about 20%. Would your advice the installation? Use the following methods - a) ROR b) PW (

3) A certain warehouse is worth P700,000. The average value of the merchandise in the warehouse is P600,000. The annual insurance rate on the warehouse is 1% and the merchandise stored in the warehouse is 0.9%. A proposal for the installation of a fire sprinkler system is being considered. The system will cost P70,000 and will affect a savings of 50% in both insurance premiums. Annual maintenance cost is estimated to be P1,500 and annual taxes of P600 for the sprinkler system. The owners of the warehouse demand that the investment in such equipment be written-off within 10 years. Invested capital can be expected to earn a minimum return of about 20%. Would your advice the installation? Use the following methods - a) ROR b) PW (

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6-53. A set of four "100-year," sixty (60) watt light bulbs costs $24.95. If H equals the annual number of hours the bulb is used, each bulb provides 100H hours of light, and the efficiency of each bulb is 80%. A set of four, sixty (60) watt standard bulbs costs $2.60. Each standard bulb provides H hours of light and the efficiency of each bulb is 95%. If the cost of electricity is $0.0574/kWh, how many hours of operation each year will make the costs of the two types of bulb breakeven? Your personal MARR is 5% per year. Assume repeatability. State other realistic assumptions you must make.
EVALUATE THE REQUIRED VALUE BASED ON THE GIVEN STANDARD NOTATION BD20,500 (A/P, 9%, 7) 2. BD590 (F/A, 5%, 10)
Background: A client is contemplating on purchasing a new high efficiency pump and motor, with an initial cost of $10,000. The pump has a lifetime of 15 years and is estimated to save approximately $1,000 per year. There is an additional maintenance cost of $300 per year associated with this new pump. The pump will have a salvage value of $0 at the end of its lifetime. Assume the interest rate is 4%. Problem: What is the annual value of the pump?
A mechanical engineer is considering building automated material-handling equipment for a production line. On one hand, the equipment would substantially reduce the manual labour currently required to move items from one part of the production process to the next. On the other hand, the equipment would consume energy, require insurance, and need periodic maintenance. Manual Labors: Yearly labour costs are $9200. Automated material-handling equipment. expected service life of 10 years. First cost Maintenance Taxes & Insurance $300/yr Labour Power $15,000 $3,300/yr $400/yr $2,400/yr If the MARR is 9%, Use a PW to make the decision (automate or not).
The manager of Automated Products is contemplating the purchase of a new machine that will cost$300,000 and has a useful life of five years. The machine will yield (year-end) cost reductions toAutomated Products of $50,000 in year 1, $60,000 in year 2, $75,000 in year 3, and $90,000 in years4 and 5. What is the present value of the cost savings of the machine if the interest rate is 8 percent?
6.
I have purchased a machine worth P1,700,801.00. And it needs maintenance every 6 months starting from its purchased date for the first 10 years of its useful life. The maintenance cost is equivalent to the 2% of the total machine cost. How much money should be prepare today to finance the requirement if the interest rate is 0.10 compounded quarterly? note:answer should be 400,000 and up
An alternative method of construction would be to construct a bridge of pre-stressed concrete construction. The estimated life of such a structure will be 20 years. The first cost would be $150,000 and it would have a salvage value of $20,000 at the end of its useful life. The yearly maintenance cost would be $2,000. What would be the total yearly cost? The interest rate is 8%.
Q3 solution
Question 1 Calculate the equivalent annuity (A) for the 6-year cash-low shown below assuming an interest rate of 10%. $10,000 $20,000 $20,000 $20,000 $20,000 $20,000
A certain warehouse is worth P700,000. The average value of the merchandise in the warehouse is P600,000. The annual insurance rate on the warehouse is 1% and the merchandise stored in the warehouse is 0.9%. A proposal for the installation of a fire sprinkler system is being considered. The system will cost P70,000 and will affect a savings of 50% in both insurance premiums. Annual maintenance cost is estimated to be P1,500 and annual taxes of P600 for the sprinkler system. The owners of the warehouse demand that the investment in such equipment be written-off within 10 years. Invested capital can be expected to earn a minimum return of about 20%. Would you advice the installation? (Use ROR and PW)
8. (10%) Two pumps are being considered for service in Africa. Each can draw water from a depth of 50 meters and both pumps deliver 60 horsepower (output) to the pumping operation. One of the pumps must be selected. It is expected that the pump will be in use 800 hours per year and electricity costs $0.14 per kilowatt-hour. The following data are available. Recall that 1 hp = 0.746 kW. Capital investment Electrical efficiency Annual maintenance cost Useful life Pump A $2,400 0.92 $320 3 years Pump B $2,000 0.80 $200 6 years The MARR is 15% per year. Determine which alternative should be selected if the repeatability assumption applies.