A company is considering the following two alternatives: Alt. 1 $42,500 6,000 18,500 12,000 1.5 years Alt. 2 S70,000 4,000 20,000 25,000 3 years First cost Annual maintenance Annual savings Salvage value Useful life If interest is 20% per year, which alternative is preferred?

A company is considering the following two alternatives: Alt. 1 $42,500 6,000 18,500 12,000 1.5 years Alt. 2 S70,000 4,000 20,000 25,000 3 years First cost Annual maintenance Annual savings Salvage value Useful life If interest is 20% per year, which alternative is preferred?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: A business executive is offered a management job at Generous Electric Company, which offers him a…

A: Meaning of Financial Assets: The term financial assets refer to the situation, under which these…

Q: Use Present Worth Analysis to determine whether Alternative A or B should be chosen. Items are…

A: The present worth of a project or investment refers to its value at present based on the associated…

Q: rice ceiling

A: A price ceiling is a central authority-imposed maximum limit on the charge that can be charged for a…

Q: Machine Initial cost, $ Annual cost, $/year Salvage value, $ Life, years O-$87,840 The estimates for…

A: present value is the value of investment in today's dollar. Future value is the value of investment…

Q: Zwane has a debt that will be R1000 in 11 months. He has 3 options to consider for his repayment.…

A: An amount of money today is considered to be worth more than the value of money in the future. This…

Q: An investment of P2, 700, 000 can be made in a project that will produce a uniform annual revenue of…

A: Engineering economics, formerly engineering economy, is a branch of economics concerned with the…

Q: Plastics recycling equipment is estimated to cost $300K. It will increase profit by $75K per year…

A: Cost of Equipment 300000 Profit 75000 Upgrade Cost 50000 MARR 0.15 Life 8

Q: Which alternative in the table below should be selected when the MRR = 6% per year? The life of each…

A: The internal rate of return (IRR) is the annual rate of development that a venture is supposed…

Q: person receives SR10,000 today and wants to invest it at 8% per year to be able to withdraw SR2000…

A: Investment is the act of keeping money in bank or any other organization for earning profit.

Q: Buying Equipment 1 from XYZ company and company ABC will give the production similar productivity…

A: In the realm of economics, decision-making regarding investments plays a critical role in…

Q: Buying Equipment 1 from XYZ company and company ABC will give the production similar productivity…

A: Present worth, also known as net present value (NPV), is a financial concept used to assess the…

Q: Airodyne Wind, Inc., has wind tunnels that can operate vertically or horizontally for evaluating the…

A: The annual cost of owning, running, and maintaining an asset over the course of its entire life is…

Q: ! Required information A company that manufactures magnetic flow meters expects to undertake a…

A: It is the cost incurred by the investor for using the assets, Here, things are included such as…

Q: Your cousin is curenty 11 years count promses to pay afedi gong to colege in 7 yeaars Your aunt and…

A: Money is a commodity accepted by general consent as a medium of economic exchange. Here, we…

Q: Required information A company that manufactures magnetic flow meters expects to undertake a project…

A: Equivalent Annual Cost (EUAC) is used to evaluate the cost of an investment or project on an annual…

Q: Required information A company that manufactures magnetic flow meters expects to undertake a project…

A: The annual worth ascertains the annual cash flow throughout the investment period which is…

Q: A series of equal quarterly deposits of $8,000 extends over a period of threeyears. It is desired to…

A: The quarterly interest rate can be calculated as follows: Thus, the interest rate is 2.01%

Q: You are a consultant at Brinkley & co .you are responsible for evaluating projects introduced by…

A: Initial Investment = 35000 Return = 10000 (for the next10 years) Time = 10 years MARR = 12%

Q: Refer to Daisy's PPF Assume Daisy is only able to get 4 lbs of flour each week. Describe her new PPF…

Q: A company is offered a new computer program that is supposed to provide savings in costs. The cost…

A: Answer to the Question :- Given :- Cost Savings per annum = 100,000 New Equipment Cost = 200,000…

Q: 1) If money is worth 15%, what is the Total Annual Cost of Machine A (using Annual Worth Method)?

A: Machine A Machine B First cost 11,002 18,000 Annual operating cost 3,561 3,100 Salvage value…

Q: Time Value of Money - Buy vs Rent Decision Rebecca Young recently graduated from Masters program and…

A: Let's assume the following:The purchase price of the condominium is $250,000.Rebecca can afford a…

Q: A university lab is a research contractor to NASA for in-space fuel cell systems that are hydrogen-…

A: Given MARR = 10 % time = 8 years Present worth = cashflow each year / (1 + rate)^time NPV = sum of…

Q: Problem 2: Select one of the following two plans using the present worth method. Given i= 20% per…

A: Given,In the case of Plan 1,In the case of Plan 2,

Q: Arc-bot Technologies, manufacturers of six-axis, electric servo-driven robots, has experienced the…

A: a. Table 1 shows the cash flow:

Q: Given the indifference curve shown to the right K a. What is the marginal rate of substitution as…

A: Marginal rate of substitution refers to the rate of exchange between two different goods in which…

Q: Required information The TT Racing and Performance Motor Corporation wish to evaluate two…

A: The objective of this question is to determine which machine, R or S, is a better investment for TT…

Q: A company that manufactures magnetic membrane switches is investigating two production options that…

A: "Since you have posted multiple questions, as per guidelines,we are supposed to solve only first…

Q: A Construction company may buy a new truck with a 10-year life. Interest is 5%. The cash flows for…

A: NPW is the abbreviation used for Net present worth or net benefits after discounting the cash flows…

Q: 2. Find the supply function for good 1 of each firm and the market supply function for good 1, and…

A: Solve 2 questions with the help of graph

Q: In the market for reserves, if the Federal Reserve Bank increases the required reserve ratio, this…

A: Required reserve ratio:- A required reserve ratio can be explained as the percentage of assets which…

Q: For the cash flows shown, determine the incremental cash flow between machines B and A for (a) year…

A: Given: First Cost: A: -15000, B:-25000

Q: 12.9 A three-year maintenance contract for a local computer network costs $4000. The network is…

A: Cash flow:The sum of the total money is represented in the diagram. It represents the magnitude and…

Q: -; A company buys equipment for $30000. Annual net savings is 1000 per year for 8 years. The…

A: Answer I attached below

Q: A machine has a first cost of $5,000 with a useful life of 5 years. It will have a salvage value of…

A: Given The first cost of machine =$5000 Useful life= 5 years Yearly maintenance cost =$500 Salvage…

Q: Jane Smart plans to make the following deposits in an account towards cash purchase of a real estate…

A: The interest rate is the amount a moneylender charges a borrower and is a percentage of the…

Q: For a steam power plant the repair costs are estimated to be 1.5$ per short ton coal burned. The…

A: The expenses which are considered to be necessary or reasonably desirable due to vandalism, normal…

Question

A company is considering the following two alternatives:
Alt. 1
$42,500
6,000
18,500
12,000
1.5 years
Alt. 2
$70,000
First cost
Annual maintenance
Annual savings
Salvage value
Useful life
4,000
20,000
25,000
3 years
If interest is 20% per year, which alternative is preferred?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

A town want to replace an existing bridge that cost $5000 annually in an operation and maintenance has a remaining useful life of 20yrs. The new bridge will cost $500000 for construction and an additional $2000 for manual operation. The new bridge is expected to have a useful life of 50yrs. Thus, extending the life by 30yrs if interest rate is 8% single payment present worth of 20yrs is what?
Solution sent me very fast a and b
The buyer of a certain machine may pay either P2000 cash down paymentand P2000 annually for the next 6 years, or pay P3,500 cash and P2000annually for the next 5 years. If money is worth 12% compoundedannually, which method of payment is better for the buyer and by howmuch?
Engineering Economics
i need the answer quickly
i need the answer quickly
Urgently need
Bruce deposited $100 into the bank account. The account is credited with interest at a nominal annual interest rate of 4% which can be converted every half year. At the same time, Peter deposited $100 into a separate account. Peter's account is credited with annual interest of δ. After 7.25 years, their value for money is the same. calculate value δ!
Mr. Johnson borrows $100 000 at 10% effective annual interest. He must pay back the loan over 30yrs with uniform monthly payments due on the first day of each month. What amount does Mr. Johnson pay($) each month?
The income from an established chain of laundromats is a continuous stream with its annual rate of flow at timer given by )- 210,000 (dollars per year). If money is worth 3% compounded continuously, find the present value and future value of this chain over the next 5 years. (Round your answers to the nearest dollar) present value future value $ Need Help?
A certain property is being sold and the owner receives two bids. The first bidder offered to pay P400000 each year for 5 years and the payment is to be made at the beginning of each year. The second bidder offered to pay P240000 fest ysar, P350000 the second year, and P540000 each year for the next 3 years, all payments to be made at the beginning of each ysar, If money is worth 20% compounded annually, which bid should the owner of the property accept?
What is the monthly payment for a $5000.04 year loan with an APR of 2%?