3. Make an economic analysis to determine which of the following two machinescapable of performing the same task in a given amount of time, should be purchased.The minimum return is 8%.Machine AMachine BFirst CostP10,0006 yearsP20,00014 yearsEstimated LifeSalvage ValueAnnual maintenanceP6,000P300P250Basing on annual cost, using straight line method of computing depreciation, determinewhich machine you would choose and how much is the difference in its annual cost?Hint: Compute the Annual Cost of Machine A and Machine B then compare the costs, get thedifference and recommend.

here we calculate the annual worth of the both machine and choose the best machine so , here we…

3. Make an economic analysis to determine which of the following two machines capable of performing the same task in a given amount of time, should be purchased. The minimum return is 8%. Machine A Machine B First Cost P10,000 6 years P20,000 14 years P6,000 P300 Estimated Life Salvage Value Annual maintenance P250 Basing on annual cost, using straight line method of computing depreciation, determine which machine you would choose and how much is the difference in its annual cost? Hint: Compute the Annual Cost of Machine A and Machine B then compare the costs, get the difference and recommend.

3. Make an economic analysis to determine which of the following two machines capable of performing the same task in a given amount of time, should be purchased. The minimum return is 8%. Machine A Machine B First Cost P10,000 6 years P20,000 14 years P6,000 P300 Estimated Life Salvage Value Annual maintenance P250 Basing on annual cost, using straight line method of computing depreciation, determine which machine you would choose and how much is the difference in its annual cost? Hint: Compute the Annual Cost of Machine A and Machine B then compare the costs, get the difference and recommend.

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

From the data shown, determine the ESL of the asset. (Note: Values in the table are AW values, not individual year end values.) AW of First Cost, $ AW of Salvage Value, $ AW of Operating Cost, $ -48000 164000 99,000 -36000 38,095 47000 18,127 -53000 6464 49000 3276 Years Retained 1 2 3 4 5 The ESL of the asset is year(s). -148000 -162000 134000 154000
Please solve question 7 using the data from question 5.
1. The data for new and used machines are shown below: Initial cost($) Annual operating cost ($/year) Salvage value ($) Life (years) Used machine 15,000 8,000 5,000 3 New machine 40,000 2,000 10,000 6 Using an interest rate of 10% per year, determine the present worth of the new machine.
None
A company is considering the purchase of either machine A or machine B. And the interest rate is 10%. The following table shows the cash flows of both machines. Machine Initial investment ($) Other costs ($) Service life (years) Salvage value ($) Cash flow diagram for Machine A: A $80,000 $10,000 for the first 10 years, increasing at a rate of 5% from year 11 onwards 20 20,000 PW of machine A: B $100,000 $15,000 for the first 15 years and $20,000 for the remaining years a) Which alternative should the company choose if it adopts an interest rate of 10%? Use present worth (PW) method to evaluate the two machines and show your calculations in the space given below. 20 25,000
1. An industrial plant is considering the purchase of a centrifugal pump. Three offers were received and basis of selection have been tabulated as follows: Offer A Offer B Offer C Price of pump P60,000 P96,000 P120,000 Economic life, years 3 5 10 Salvage value at end of economic life 5,000 10,000 8,000 Yearly maintenance cost 10,000 6,000 5,000 . If cost of money is 14%, what offer would you recommend to be purchased? Use the rate of return method, the annual cost method, present worth method and equivalent uniform annual cost method for the evaluation Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.