A high-speed electronic assembly machine was purchased two years ago for $50,000. At the present time, it can be sold for $26,000 and replaced by a newer modelhaving a purchase price of $37,500; or it can be kept in service for a maximum of one more year. The new assembly machine, if purchased, has a useful life of notmore than two years. If the before-tax MARR is 12%, when should the old assembly machine be replaced? Use the following data table for your analysis.ChallengerDefenderO&M Costs$11,50013,000Year0Market Value$37,50031,0001226,000Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year.The minimum EUAC value of the challenger is $Market Value$26,00016,500(Round to the nearest dollar.)O&M Costs$15,500

In economics, the term "economic cost" has a broader meaning than simply the amount of money spent.…

Answered: A high-speed electronic assembly…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Using the asset description and table below, find the economic service life (ESL) of the asset, assuming MARR = 8%. The company is committed to using the asset for the upcoming year, but is unsure about the following years. Today's market value is $70,000, and it will last another 4 years before failure. Each year, the after-tax market value decreases by $10,000. The operating cost of the asset in year 1 is expected to be $30,000, and it will increase by $5,000 each year through year 4. a. 3 yearsb. 1 yearc. 4 yearsd. 2 years
An industrial organization has established an automated assembly line (for $360,000) that will reduce labor costs by $56,000 each year for 10 years. The Internal Revenue Service has ruled that you must depreciate the assembly line on a Straight Line (SL) basis with a depreciable life of 10 years. After-tax MARR is 10% per year. The effective income tax rate is 25%. After 10 years, the machine will have zero salvage value. a) Draw a table showing Before Tax Cash Flow (BTCF) and After-Tax Cash Flow (ATCF). b) Calculate the after-tax PW and IRR. (Use interpolation method to find IRR). Is it feasible?
The Smith and Jones Research and Development firm has bought a new laboratory equipment (MACRS-GDS 3-year property class) to be used in a research project that will last 3 years. The cost of equipment is $750,000 but require bringing a technician to install the equipment and train the personal with an additional cost of $75,000. The equipment’s supplier will buy back the equipment at the end of the project for $50,000. The O&M costs per year incurred by the equipment are $70,000. The firm signed a contract with the DOD that states that they will receive a one lump-sum of $Y at the end of the life of the research project that will generate a rate of return of 8%. The firm will finance the equipment with a loan at 6% interest rate per year, and considering that the firm will not generate any revenue until the end of year 3, the bank has agreed that principal and accrued interests will be paid at the end of year three. Perform an ATCF analysis to determine the value of Y$ that will…
A small pump costs $24,000 and has a life of 8 years and a $1,400 SV at that time. If the 150% DB method is used to depreciate the pump, what is the BV at the end of year three? ..... Choose the correct answer below. O A. The BV at the end of year three is $13,624. B. The BV at the end of year three is $3,000. C. The BV at the end of year three is $4,558. D. The BV at the end of year three is $12,873.
A company just bought a new piece of equipment for $4.919 million. The following information is given: - after-tax annual interest rate = 17.9% - corporate tax rate = 29% - service life = 24 years - depreciation rate = 20% Calculate the present worth of the equipment's salvage value with tax effects.
You are considering the purchase of a new high-efficiency machine to replace older machines now. The new machine can replace four of the older machines, each with a current market value of $600. The new machine will cost $5000 and will save the equivalent of 10,000 kWh of electricity per year. After a period of 10 years, neither option (new or old) will have any market value. If you use a before-tax MARR of 25% and pay $0.075 per kilowatt-hour, would you replace the old machines today with the new one?A professor of engineering economics owns an older car. In the past 12 months, he has paid $2000 to replace the transmission, bought two new tires for $160, and installed a music system for $110. He wants to keep the car for 2 more years because he invested money 3 years ago in a 5-year certificate of deposit, which is earmarked to pay for his dream machine, a red European sports car. Today the old car’s engine failed.
A high-speed electronic assembly machine was purchased two years ago for $50,000. At the present time, it can be sold for $27,000 and replaced by a newer model having a purchase price of $44,000; or it can be kept in service for a maximum of one more year. The new assembly machine, if purchased, has a useful life of not more than two years. If the before-tax MARR is 12%, answer the following two questions: Challenger O&M Costs Year Market Value 0 $44,000 1 2 34,000 27,000 Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year. $12,000 13,000 Defender Market Value $27,000 19,000 O&M Costs $14,000 1. The minimum EUAC value of the challenger is ○ A. $30,390 B. $25,771 ○ C. $30,554 D. $27,280 ○ E. $24,080 2. The marginal cost of keeping the defender in service for one more year is OA. $33,000 B. $25,240 C. $10,280 OD. $11,240 O E. $22,000

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