4. Determine the economic service life andcorresponding AW for a machine thathas the following cash flow estimates.Use an interest rate of 14% per year andhand solution.SalvageValue, $100,00075,00060,00050,00040,00025,00015,000OperatingYearCost, $28,00031,00034,00034,00034,00045,00049,0001467

Economic service life is when the project's equivalent uniform annual cost is minimum. Equivalent…

4. Determine the economic service life and corresponding AW for a machine that has the following cash flow estimates. Use an interest rate of 14% per year and hand solution. Operating Cost, $ Salvage Value, $ 100,000 75,000 60,000 50,000 40,000 25,000 15,000 Year 1 28,000 31,000 34,000 34,000 34,000 45,000 49,000 3 4 6. 7

4. Determine the economic service life and corresponding AW for a machine that has the following cash flow estimates. Use an interest rate of 14% per year and hand solution. Operating Cost, $ Salvage Value, $ 100,000 75,000 60,000 50,000 40,000 25,000 15,000 Year 1 28,000 31,000 34,000 34,000 34,000 45,000 49,000 3 4 6. 7

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

4. Determine the economic service life and
corresponding AW for a machine that
has the following cash flow estimates.
Use an interest rate of 14% per year and
hand solution.
Salvage
Value, $
100,000
75,000
60,000
50,000
40,000
25,000
15,000
Operating
Year
Cost, $
28,000
31,000
34,000
34,000
34,000
45,000
49,000
1
4
6
7

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The following present value factors are provided for use in this problem. Periods 1 2 3 4 Present Value of $1 at 8% 0.9259 0.8573 0.7938 0.7350 Xavier Co. wants to purchase a machine for $37,800 with a four year life and a $1,200 salvage value. Xavier requires an 8% return on investment. The expected year-end net cash flows are $12,800 in each of the four years. What is the machine's net present value? Multiple Choice O O $4,595. $(5,477). $(4,595). Present Value of an Annuity of $1 at 8% 0.9259 1.7833 2.5771 3.3121 $43,277.
Consider two air-conditioning systems with the cash flow estimates as given below. Use AW analysis to determine the sensitivity of the economic decision to MARR values of 4%, 6%, and 8% per year. Air-Conditioning System 1 System First cost, $ AOC, $ per year Salvage value, $ New compressor and motor cost at midlife, $ Life, years -10,000 -500 -100 -1,850 8 The annual worth of air-conditioning system 1 when the MARR is 4% is $ The annual worth of air-conditioning system 2 when the MARR is 4% is $ The annual worth of air-conditioning system 1 when the MARR is 6% is $ The annual worth of air-conditioning system 2 when the MARR is 6% is $ The annual worth of air-conditioning system 1 when the MARR is 8% is $ The annual worth of air-conditioning system 2 when the MARR is 8% is $ Air-Conditioning System 2 -14,000 -85 -300 -2,540 12
Solve again without using excel.
Vijay
24
5. Compare the following 2 alternatives with a method of your choice. The market rate is 6% and inflation is expected to run at 2.5% per year. Alt A B Construction cost $ Benefits $/yr 450,000 380,000 2,000,000 1,500,000 Salvage 200,000 150,000 Life (yrs) 12 9
a- At 10%, find PW for the following Table Warehouse cost equipment cost Installation cost Annual maintenance costs Annual Revenues Salvage Machine life 0 1 2 3 -90,000 b- A project with an IRR = 20%, it has the following NCF (S) X X 4000 (SUS) 50,000 46.000 Find X? 6,500 8,000 45,000 15,000 15 years
I will rate. Solve correctly and show all works.
Compute the payback statistic for Project A if the appropriate cost of capital is 9 percent and the maximum allowable payback period is four years. (Round your answer to 2 decimal places.) Project A Time: 0 1 2 3 4 5 Cash flow: −$2,100 $790 $810 $740 $520 $320 Payback: ? Years
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