A certain newly created company installed a10,000 KW electric generating plant at a cost ofP430 per kW. The amount of the total cost of theplant was sold to the public and were to maturein 15 years. The salvage value is conservatively setat 5% of the first cost, interest bond is 4%and on sinking fund deposit is 3½% What is thesinking fund accumulation after 10 years?

A sinking fund is typically used to save money for a future expenditure or to pay off debt. A…

Answered: A certain newly created company…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Mr. Russ T. Steele sells his old vehicle for $5000 (you get more if you private salel) and pays cash for a used (but newer vehicle) that costs $10,000. He also understands that he needs to allow for maintenance and operation costs of his vehicle. He estimates that these costs will be approximately $2000 a year and estimates that the costs will increase by $100 per year. He hopes to keep the vehicle for five years and then sell it for an estimated value of $2000. Mr. Steele has an MARR of 8%. The present value of the cash flow associated with his purchase is most nearly: Oa. -$7,400 b.$-12,400 C $12,000 Od.-$15,100
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Kk.7.
5.24 For the cash flows below, use an annual worth comparison to determine which alternative is best at an interest rate of 1% per month. First cost, $ M&O costs, $/month Overhaul every 10 years, $ Salvage value, $ Life, years X -90,000 -400,000 -30,000 -20,000 - Y 7000 3 - 25,000 10 Z -900,000 -13,000 -80,000 200,000 8
A company is developing a new electronic product. It expects to spend $38 million on Research and Development and then another $6 million on Manufacturing Engineering. After completing all this, the company expects a cost of $15 per unit to manufacture and plans to build in a profit of $5 per unit into the price. The company needs to recover the cost of R&D plus Manufacturing Engineering over five years through sales of 4 million units over those five years. What will the company need to establish as the sales price for the unit?
a) Straight Line Method, b) Sinking Fund Method, c) Declining Balance Method, and d) Sum-of- Years Digit (SOYD) Method. First cost = P10,000 %3D Salvage Value = P500 Life of Property = 5 years For sinking fund method, assume 10% interest rate.
A potential client has offered the possibility to sign a contract, starting in 6 years, with a duration of 8 years (so it will produce 8 payments), to purchase a specific part that we can produce, but that will require a total reconversion of the whole factory. This contract is signed for annual revenues of $400,000. To do this, we must replace the machinery and the production plant must be reconverted. a) What is the maximum amount of money we could afford to invest if we want a profitability of at least 4%? b) If we ask for a loan to be paid back in 5 years in constant equal monthly payments of $30,000, how much will we pay in total for the loan?
Ali needs to work on a project in Australia for 5 years and he needs a car. He has the choice between buying one and leasing one. After some research, he finds out the following: If he decides to buy the car, it would cost him 300,000 AED and after five years, he could sell it for 30A AED. If he decides to lease the car, he would have to pay 50,000 AED per year. Assuming an MARR of S perform an evaluation and decide if he should lease or buy the car.
An initial capital of $25,000 was put up for a new project that will produce an annual income of $8,500 for 5 years and then will have a salvage value of $1,000 at that time. Annual expenses for its operation and maintenance amounts to $750. If money is worth 7% compounded annually, determine the project's ERR (in %, round-off to 5 decimal places).

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