A 3-year old truck is being considered for early replacement. Its Current market value is $25,000.Estimated future market values and annual operating costs for the next 5 years are given in thefollowing table. What is the ESL if i=10%?Year MV, $ AOC, $1 10,000-5,0002 8,000 -6,50036000 -8,00042000 -9,5000-12,5005O 5 yearsO 4 yearsO 3 years2 years

ESL stands for Equivalent Service Life. It represents the number of years a truck should be kept in…

Answered: A 3-year old truck is being considered…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Similar questions

Giving the following information on machine A and machine B and assuming an 8.6% MARR, which mutually exclusive alternative should be selected?
The following table contains a summary of how a project's balance is expected to change over its 5 year service life at 10% interest. End of Period Project Balance -$1,000 -1,500 600 1 3 900 4 1,500 2,000 5 Which of the following statements is incorrect? Select one: a. The net future of the project at 10% interest is $2,000 b. The required additional investment at the end of period 1 is $500 c. The net present worth of the project at 10% interest is $1,242 d. Within 2 years, the company will recover all its investments and the cost of funds (interest) from the project
With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine X that will render its AW equal to that of machine Y at an interest rate of 13% per year. Determine the replacement value. Market Value, $ Annual Cost, $ per Year Salvage Value Life, Years Machine X ? -56,500 13,500 3 Machine Y 84,000 -40,000 for year 1,increasing by 2000 per year thereafter. 18,000 5
1-)According to replacement analysis, determine the number of years that the defender should be used before replacement. Defender Challenger Year, TC EUAC TC EUAC k 1 14,000 14,000 15,000 15,000 2 12,000 13,038 11,500 13,317 Scenario 3 13,000 13,027 14,000 13,528 1 4 14,000 13,243 14,500 13,743 5 15,500 13,627 16,000 14,128 Your answer: Use defender: 5 years than replace with the challenger Use defender: 3 years than replace with the challenger Use defender: 1 year than replace with the challenger Use defender: 0 year than replace with the challenger Use defender: 2 years than replace with the challenger Use defender: 4 years than replace with the challenger
If Dr. Smith buys a machine for $5,000 as is able to improve the earnings of her practice by $2,000 a year for five years, and then can sell the machine for $600 as scrap. What is the IRR?
9
Question 5 Cost data of a machine is shown in the following table with an annual rate of 12%. Calculate annual worth at end of year 2 M&O cost Retention Yr. Market Value per year O First Cost) 55,000 1 35,000 45.000 2 20,000 47.500 3 15,000 50.000 4 2.000 53.500 O 6a256 O 69209 O R476 O 67.854 Question 6 Use same cost data from last question and 12% annual rate of return. Calculate annual worth at end of Year 3. O 66.765 O 64332 O 67.428 O 66256 D Question 7 Use the same cost data of the machine from the above 2 questions and 12% interest rate per year. What is the ESL of this machine? 01 04
Below are the costs and revenues of 2 alternatives for a machine. When the discount rate is 26.5% per year, determine which alternative is economically viable using the annual value method. 1. Machine 2. Machine Initial investment expense $1,400,000 $1,170,000 Scrap price $280,000 $175,500 First year value of annual operating expense $60,000 $28,000 Annual increase rate of operating expenses %23 %26 Annual revenue $720,000 $630,000 Annual revenue change 8 years fixed, then descending linearly 7 years fixed, then geometricdecreasing Annual reduction rate of revenues or quantity $3,500 -%6 Economic Life 20 years 15 years Below are the costs and revenues of 2 alternatives for a machine. When the discount rate is26.5%per year, determine which alternative is economically viable using the annual value
A machine costs P150,00O and will have a scrap value of P10000 when retired at the end of 15 years. If money is worth 4%, find the annual investment and the capitalized cost of the machine.
A company is looking to install a new automated system to increase its revenues by $24,000 per year over the next five years. Annual expanses of the system are expected to be $3,400. The system will cost $80,000 and have $5,000 salvage value at the end of the fifth year. If the MARR is 10%, what is the Annual Worth (AW). Select one: O a. $215 O b. $115 O C. $315 O d. $415
10.7 Determine the economic life of an $800 laptop computer. Your personal interest rate is 10% per year. Annual expenses and year-end resale values are expected to be the following: Year 1 Year 2 Year 3 Software upgrades and maintenance $150 $200 $300 Resale value at end of year $600 $450 $200
What is the total lifetime cost of the system given the following information? The initial cost of the system is $4800. The system has annual maintenance costs of $175. On the fourth year, an overhaul cost of $350 is scheduled. The system is expected to last for 5 years. The discount rate is 8%. Answer to the nearest dollar $________.00.

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