5. Resistance to failures of equipment worth $8000 is 75%. Likelihood of an incident is once every four years. What is the value of ALE? 6. Due to equipment failure, the probability of data loss is 0.35. Likelihood of an incident is twice a year. The value of the assets is estimated as $30,000. What is the value of ALE?

5. Resistance to failures of equipment worth $8000 is 75%. Likelihood of an incident is once every four years. What is the value of ALE? 6. Due to equipment failure, the probability of data loss is 0.35. Likelihood of an incident is twice a year. The value of the assets is estimated as $30,000. What is the value of ALE?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 2CE

See similar textbooks

Similar questions

If an incident is expected to happen every 3 months and the cost of recovering from a single incident is $1000, what is the annual loss of expectancy (ALE) for this incident? 2000 3000 333.33 4000 None of these
Case Scenario: ABC Company’s data center in Houston is valued at $1,000,000. It is estimated that a flood occurred to it would damage 50% of value of the data center. Official statistics indicate that the probability of the data center getting flooded is once every 10 years. Question 1: What is the single loss expectancy (SLE) from flooding in this case?Question 2: What is the annual loss expectancy (ALE) from flooding in this case? Note: You need to show the formula and calculation work for each answer.
A new garbage truck can be purchased for $64,000. Its expected useful life is six years at which time its market value will be zero. Annual receipts is expected to be $20,000 with expenses of $2,000 per year over the six-year study period. The company's MARR is 18%. a. What is the ROI? b. Determine if this is a good investment using Net Present Worth(NPW) method. c. What is its Net Annual Worth? d. Using IRR method, is this investment acceptable?
A conveyor system costs $110,000 to install. The salvage value of the conveyor system decreases by $20,000 each year until its salvage value is $0, at which point it no longer decreases. The cost to operate and maintain the conveyor system the first year is $20,000; this cost increases by 7% per year. What is the optimal replacement interval and minimum EUAC for the conveyor system, assuming a MARR of 15% is used? Click here to access the TVM Factor Table Calculator. years ORI: EUAC*: $ Carry all interim calculations to 5 decimal places and then round your final answers to a whole number. The tolerance is ±10 for the EUAC*. eTextbook and Media Hint Assistance Used Construct an Excel® table that computes the EUAC for different values of n. This will help you to find EUAC*, from which you can deduce the optimal replacement interval.
A low-cost noncontact temperature measuring tool may be able to identify railroad car wheels that are in need of repair long before a costly structural failure occurs. If the BNF railroad saves $100,000 in year 1, $110,000 in year 2, and amounts increasing by $10,000 each year for 5 years, what is the future worth of the savings in year 5 at an interest rate of 10% per year?
A new project related to high-end machinery is capable of returning 8% p.a on the investment. A research scientist decided to invest $15000 in year 1 and the investment amount will increase by 3% each year after year 1. The salary of the research scientist at the end of Year 1 is $97000 and the salary increases by 5% every year. Calculate the final worth of the investment after 15 years. Solve by using formulas (use of tables is not allowed)
An investment company wants to study the usage of new technology for one of its clients. This technology will decline the human resource usage by 187 (Human Hour/Month). average saving for each Human Hour/month is $450. If this work schedule continues for the next 8 years. what is the future worth of the saving at the end of that time period? Use an interest rate 0.06 per year, compounded monthly. Answer:
A distribution center wants to evaluate an alternative product tracking system. The system has an initial cost of $500,000 and a useful life of 7 years. The operating cost is estimated to be $550 per metric ton of product moved per day. The center can handle between 30 and 50 tons per day. Analyze the sensitivity of the PW to changes in a 10-metric-ton increment of product moved. Use an interest rate of 3% per year and 200 days of work per year. Find the PW of 3 options.
4. Two alternatives can be used to solve a repeatedly valve failure problem. A) Use new valves from company A with the initial cost of $10000, and every year needs to pay $1500 for maintenance up to 5 years. B) Hire an equipment company to repair the system. Initial cost is $20000 and every year needs maintenance cost of $1200 up to 5 years. Use NPW method to compare which method is better at i=10%.
The value of a large piece of equipment decreases from OMR 185,000 to OMR 95,000 in six years. If the value decreases exponentially, at what continuous rate is the value decreasing?
A device is purchased for $30,000. It yields a $5,000 yearly net profit for first 4 years and then decreases $500 every year after that ($4,500 for 5th year, $4,000 for 6th year, $3,500 for 7th year ….. ). The device is sold after 10 years. What is its minimum selling price after 10 years to break even with i=10%/yr?
Pittsburgh Custom Products (PCP) purchased a new machine for ram-cambering large I beams. PCP expects to bend 50 beams at $1,200 per beam in each of the first 3 years, after which it expects to bend 100 beams per year at $2,900 per beam through year 12. If the company's minimum attractive rate of return is 15% per year, what is the present worth of the expected revenue? The present worth of the expected revenue is $