A large food-processing company is considering using laser technology to speed up and eliminate waste in the potato-peeling process. To implement the system, the company anticipates needing $3.2 million to purchase the industrial-strength lasers. The system will save $1,500,000 per year in labor and materials. However, it will incur an additional operating and maintenance cost of $300,000 per year. Annual income taxes will be $170,000. The system is expected to have a 10-year service life and a salvage value of $200,000. If the company's MARR is 18%, calculate the net present worth of this investment.

A large food-processing company is considering using laser technology to speed up and eliminate waste in the potato-peeling process. To implement the system, the company anticipates needing $3.2 million to purchase the industrial-strength lasers. The system will save $1,500,000 per year in labor and materials. However, it will incur an additional operating and maintenance cost of $300,000 per year. Annual income taxes will be $170,000. The system is expected to have a 10-year service life and a salvage value of $200,000. If the company's MARR is 18%, calculate the net present worth of this investment.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

An integrated, combined cycle power plant produces 285 MW of electricity by gasifying coal. The capital investment for the plant is $450 million, spread evenly over two years. The operating life of the plant is expected to be 18 years. Additionally, the plant will operate at full capacity 76% of the time (downtime is 24% of any given year). The MARR is 10% per year. a. If this plant will make a profit of two cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low-risk venture? b. What is the IRR for the plant? Is it profitable? a. The simple payback period of the plant is years. (Round up to one decimal place.) It's a venture. b. The IRR for the plant is%. (Round to one decimal place.) The plant is
A 50-kilowatt gas turbine has an investment cost of $35,000. It costs another $15,000 for shipping, insurance, site preparation, fuel lines, and fuel storage tanks. The operation and maintenance expense for this turbine is $500 per year. Additionally, the hourly fuel expense for running the turbine is $7.00 per hour, and the turbine is expected to operate 3,500 hours each year. The cost of dismantling and disposing of the turbine at the end of its 6-year life is $9,000. a. If the MARR is 16% per year, what is the annual equivalent life-cycle cost of the gas turbine? b. What percent of annual life-cycle cost is related to fuel? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 16% per year. a. The annual equivalent life-cycle cost of the gas turbine is $ (Round to the nearest dollar.)
After spending $10 million on research and development, the company Patronus, Inc. rolled out a new heat-sensing home alarm system called "Thermo-Shield." Patronus has made $8 million in direct sales of "Thermo-Shield" materials to customers via their website, and $12 million in sales to the home building firm D.R. Horton that will provide the alarm system as a standard part of the new houses they are building. Also, while the alarm installation company Guardian Services does not carry "Thermo-Shield" to sel, they will install "Thermo-Shield" systems that homeowners already purchased. So far, Home Depot has recorded $2,500,000 in installation service sales putting in "Thermo-Shield" systems. Based on this information, the "Thermo-Shield" product has increased GDP by which amount? $20.5 million $24.5 million O $32.5 million $30 million
A steam generation system at a biomass-fueled power plant uses an electrostaticprecipitator (ESP) to clean its gaseous effluents. The power plant has consistently made use ofthe same type of ESP over the past several years. The installed cost of a new ESP has beenrelatively constant at $100,000. Records of operation and maintenance expenses indicate thefollowing average expenses per year as a function of the age of the ESP. The MVs of the ESP arealso reasonably well known as a function of age. Data graph in image attached. Determine the best time to replace the ESP if the MARR is 15% per year.
The present price (year 0) of kerosene is $4.30 per gallon, and its cost is expected to increase by 10% per year. (At the end of year 1, kerosene will cost $4.73 per gallon.) Mr. Garcia uses about 800 gallons of kerosene for space heating during a winter season. He has an opportunity to buy a storage tank for $600, and at the end of four years, he can sell the storage tank for $100. The tank has a capacity to supply four years of Mr. Garcia's heating needs. So, he can buy four years' worth of kerosene at its present price ($4.30), or he can invest his money elsewhere at 6% interest. Should he purchase the storage tank? Assume that kerosene purchased on a pay-as-you-go basis is paid for at the end of the year. (However, kerosene purchased for the storage tank is purchased now.)
Liberty Airways is considering an investment of$800,000 in ticket purchasing kiosks at selected airports.The kiosks (hardware and software) have an expectedlife of four years. Extra ticket sales are expected to be60,000 per year at a discount price of $40 per ticket.Fixed costs, excluding depreciation of the equipment,are $400,000 per year, and variable costs are $24 perticket. The kiosks will be depreciated over four years,using the SL method with a zero salvage value. Theonetime commitment of working capital is expected tobe 1/12 of annual sales dollars. The after-tax MARR is15% per year, and the company pays income tax at therate of 34%. What’s the after-tax PW of this proposedinvestment? Should the investment be made?
The General Mills Company (GMC) purchased a milling machine for $80,000, which it intends to use for the next five years. This machine is expected to save GMC $37,000 during the first operating year. Then the annual savings are expected to decrease by 4% each subsequent year over the previous year due to increased maintenance costs. Assuming that GMC would operate the machine for an average of 4,000 hours per year and that it would have no appreciable salvage value at the end of the five-year period, determine the equivalent dollar savings per operating hour at 8% interest compounded annually. Click the icon to view the interest factors for discrete compounding when i = 8% per year. The equivalent net savings are $ per operating hour. (Round to the nearest cent.)
Question 4 Consider a proposal to enhance production of tortillas en a taqueria. The new machine is estimated to cost $30 million and will incur an additional $1 million per year in maintenance costs. The machine will produce annual savings of $6 million each year. The Minimum acceptable rate of return (MARR) is 11% per year, and the study period is five years at which time the machine will be obsolete (worthless). What is the maximum (minimum) value of maintenance cost that reverse your decision? Write 4 decimals
A company plans to design and build transport vehicles for the Army. The cost for the design is $10M. The cost for the test prototype is $2M. The cost to produce and test each production vehicle is $0.5M. What is the non-recurring cost? What is the recurring cost per vehicle? What price per vehicle must the company sell the vehicles to the government to make $50K profit per vehicle if the company sold 50 vehicles? 100 vehicles? Why does the price per vehicle go down when production goes up?
The cost of a embroidery machine is P1.2M and the cost of installation isP50,000. If the salvage value is 10% of the cost of the machine at the end of 10 years,determine the book value at the end of the 3rd year. Use Straight-Line Method. Show complete and logical solution
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
Please help.