A firm is considering the purchase of a new machine to increase the output of an existing production process. If each of these machines provides the same service over their useful lives and the MARR is 12%, which machine would be selected on the basis of PW and apply repeatability assumption? Initial Investment Net Annual Revenues Market Value at End of Useful Life Useful Life Blank 1 Blank 2 Alternative A $75,000 $20,435 Blank 3 Add your answer Add your answer $15,000 Add your answer 5 years Alternative B $75,000 $16,212 PWA $Blank 1; PWB = $Blank 2 PWC = $Blank 3 Note: For Equivalent Worth, round off your final answer to whole number. For Rate of Return, round off to two decimal places (in percentage). $12,000 6 years Alternative C $100,000 $22,675 $25,000 10 years

A firm is considering the purchase of a new machine to increase the output of an existing production process. If each of these machines provides the same service over their useful lives and the MARR is 12%, which machine would be selected on the basis of PW and apply repeatability assumption? Initial Investment Net Annual Revenues Market Value at End of Useful Life Useful Life Blank 1 Blank 2 Alternative A $75,000 $20,435 Blank 3 Add your answer Add your answer $15,000 Add your answer 5 years Alternative B $75,000 $16,212 PWA $Blank 1; PWB = $Blank 2 PWC = $Blank 3 Note: For Equivalent Worth, round off your final answer to whole number. For Rate of Return, round off to two decimal places (in percentage). $12,000 6 years Alternative C $100,000 $22,675 $25,000 10 years

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Your boss has just presented you with the summary (below) of project costs and annual revenues for a new product line. He asks you to determine whether this investment opportunity would be economically justifiable using FW method at MARR=10%. What will you present to your boss? Note: Signs represents the cash flow. Year Net Cash flow 0 -450,000 1 -42,500 2 92,800 3 386,000 4 614,600 5 -202,200
ECONOMICS (UPVOTE WILL BE GIVEN. CHOOSE THE CORRECT ANSWER. NO LONG EXPLANATION NEEDED. BOX THE FINAL ANSWER.) If the present worth of a project is given and you want to know its annual equivalent value, which working equation shall you use? A. PW = AW(P/A, i%,N) B. AW(%) = R – E – CR(i%) C. AW = PW(A/P, i%,N) D. AW = PW(P/A, i%,N)
A major equipment purchase is being considered by Metro Atlanta. The initial cost is determined to be $1,000,000. It is estimated that this new equipment will save $100,000 the first year and increase gradually by $50,000 every year for the next 6 years. MARR=10% a. Using Benefit- Cost analysis, what is the Benefit/Cost ratio for this equipment purchase? b. Based on the Benefit/Cost analysis should Metro Atlanta purchase the equipment?
2. Three mutually exclusive design alternatives are being considered. The estimated sales and cost data for each alternative are given on the next page. The MARR is 20% per year. Annual revenues are based on the number of units sold and the selling price. Annual expenses are based on fixed and variable costs. Determine which selection is preferable based on AW. State your assumptions. A в Investment cost Estimated units 60,000 20,000 $50,000 18,000 CLA to be sold/year Unit selling price, $/unit Variable costs, $/unit Annual expenses (fixed) Market value Useful life $4.40 $4.10 $1.00 $1.40 $1.15 $15,000 $30,000 $26,000 $20,000 10 years $15,000 10 years B PUBLICATIO 10 years
2. Two alternatives, a flexible manufacturing cell and fixed automation, have different cost and revenue characteristics as follows: Flexible Cell Fixed Automation Investment S2,500,000 б уears S800,000 in first year; increasing by $100,000 each year thereafter $300,000/year $1,500,000 3 years S800,000/year Life Gross cash savings s100,000 in the first year; decreasing to S80,000 in second year and S70,000 in third year Cash disbursement MARR 20% 20% Assuming "repeatability" and service needed for 6 years, show which alternative is preferred using the method of rate of return.
Three different alternatives shown in the table below are being considered by Kal Tech Engineering systems. Assume that alternatives X and Z are replaced at the end of their lives. Data Alternative X Alternative Y Alternative Z Initial Cost $6,000 $1,000 $1,500 Uniform Annual Benefits $810 $125 $ 230 Useful Life in Years 20 ∞ (infinity) 10 MARR (Interest Rate) 12% Refer to the data above. The most desirable alternative is ________. Group of answer choices Do nothing Alt. Z Alt. Y Alt. X Quiz saved at 11:56pm Submit Quiz
Please choose one of the following options. Double check your work. There is no additional information. This is the question and those are your options. PW analysis stands for Present Worth Analysis. It is a term used in engineering economics. What will be the total lifetime for every project if we compare them with PW analysis? Project A has a lifetime of 9 years, project B has a lifetime of 7 years, and project C has a lifetime of 3 years. 9 189 126 27 63
A person considers an inversion that saves 100,000 a year. annual taxes equal to 2% of its value per year annual maintenance expenses equivalent to 3% of its value lifespan of 5 years, no salvage value WIth a Depreciation using the straight line method what is the maximum you should pay for this investment? pays interest contributions 40% MARR9% a person wants to save for the university they will be attending in 5 years. Today annual tuition costs 20,000. If you can make investments that yield 8% and the inflation rate of 5%, how much should you save per year for the next 4 years to pay for a tuition year that increases according to general inflation?
-Two alternatives are shown in the table below. If the MARR is 20%, which alte mative should be selected and why? Remember to show your work!) (Estimated Rasponse Times for Awarage Student: 7 minutes) Year C C Altemative A $3.000) $1,200 $1,300 $1,300 Alemative B $1.500 $1.500 $1,500 a. Choose Altemative B because the incremental rate of retum is 18.22%, which is less than the MARR, therefore the more expensive aftemative should be selected b. Choose Altemative B because it has an IRR of 11.25% where as Alternative A only has an IRR of 9.70% c. Choose Altemative A because the incremental rate of retum is 1.54%, which is less than the MARR, therefore the cheaper alternative should be selected d. Choose Altemative A because the incremental rate of retum is 18.22%, which is less than the MARR, therefore the cheaper altemative should be selected e. Choose Altemative B because the incremental rate of retum is 1.54%, which is less than the MARR, therefore the more expensive altemative should…
4-10 Improvement and expansion of a production facility are being given economic consideration. At the present time (Alternative A), profits are running at $450,000 per year. Assume a washout in operating profit in cach of years one through 10 so they will remain constant at $450,000 per year. Two mutually exclusive alternatives for improve- ment and improvement combined with expansion are being consid- ered with projected costs and revenues as shown on the following time diagrams with all dollar values expressed in thousands of dollars. 450 450 450 A) ..... .... 0. 2 10 ... -800 700 700 700 B) 2 ... 10 850 -900 C) -1,300 1,050 1,050 1 ..... 10 1) For a minimum rate of return of 15% determine whether the present project "A," improvement project "B," or improvement plus expansion project "C" is economically best using ROR, NPV, and PVR. 2) Then increase the minimum ROR to 25% from 15% over the entire 10-year evaluation life and re-evaluate the alternatives using both ROR and NPV…
Your company is determing whether or not it should invest in a new pallet wrapping station. The station would cost $6,500 and your company's MARR is 13%. You estimate the purchasing a pallet wrapper would save you $2,000 in labor annually, and at the end of 3 years you would realize a salvage value of $400. How would you calculate the present worth of this investment in Excel?
Sheridan Company is considering a long-term investment project called ZIP. ZIP will require an investment of $129,600. It will have a useful life of 4 years and no salvage value. Annual cash inflows would increase by $86,400, and annual cash outflows would increase by $43,200. The company's required rate of return is 12%. Click here to view the factor table. Calculate the internal rate of return on this project. (Round answers to O decimal places, e.g. 15%) Internal rate of return on this project is between Determine whether this project should be accepted? The project be accepted. % and %