A manufacturer with a MARR of 20% is considering the installation of one of three packagingmachines. The economic parameters of each machine are as follows:Packaging machine:Initial cost ($)Uniform annual benefit ($)Uniform annual O&M cost ($)XY20,00040,000120,000 180,00070,00050,0006Service life (years)3Salvage value end of life ($) 2,000 4,000Z15,000100,00070,000122,000Which choice below gives the correct PW equation for machine X over the appropriate analysisperiod?O PW (costs) = $20k + $20k (P/F,20%,6) + $70k (P/A,20%, 12) - $2k (P/F,20%,6) - $2k (P/F,20%,12)NPW = [ $120k (P/A,20%, 12) ] - [ $20k + $20k(P/F,20%,6) + $70k (P/A, 20%, 12) - $2k (P/F,20%,6) - $2k (P/F,20 %,12)]PW (benefits) = $120k (P/A,20%, 12)O NPW = ($120k-$70k) (P/A,20%,12)

Net Present Value (NPV) is a financial metric utilized to determine the profitability of an…

A manufacturer with a MARR of 20% is considering the installation of one of three packaging machines. The economic parameters of each machine are as follows: Packaging machine: Initial cost ($) X Y 20,000 40,000 120,000 180,000 70,000 50,000 Service life (years) 6 3 Salvage value end of life ($) 2,000 4,000 Uniform annual benefit ($) Uniform annual O&M cost ($) Z 15,000 100,000 70,000 12 2,000 Which choice below gives the correct PW equation for machine X over the appropriate analysis period? O PW (costs) = $20k + $20k (P/F,20%, 6) + $70k (P/A, 20%,12) - $2k ( P/F,20 %,6) - $2k (P/F,20 % ,12) NPW = [$120k (P/A, 20%, 12) ] - [$20k + $20k (P/F,20%,6) + $70k (P/A,20 %, 12) - $2k (P/F,20 %,6) - $2k (P/F,20%,12)] PW (benefits) = $120k (P/A,20%, 12) NPW=($120k-$70k) (P/A 20% 12)

A manufacturer with a MARR of 20% is considering the installation of one of three packaging machines. The economic parameters of each machine are as follows: Packaging machine: Initial cost ($) X Y 20,000 40,000 120,000 180,000 70,000 50,000 Service life (years) 6 3 Salvage value end of life ($) 2,000 4,000 Uniform annual benefit ($) Uniform annual O&M cost ($) Z 15,000 100,000 70,000 12 2,000 Which choice below gives the correct PW equation for machine X over the appropriate analysis period? O PW (costs) = $20k + $20k (P/F,20%, 6) + $70k (P/A, 20%,12) - $2k ( P/F,20 %,6) - $2k (P/F,20 % ,12) NPW = [$120k (P/A, 20%, 12) ] - [$20k + $20k (P/F,20%,6) + $70k (P/A,20 %, 12) - $2k (P/F,20 %,6) - $2k (P/F,20%,12)] PW (benefits) = $120k (P/A,20%, 12) NPW=($120k-$70k) (P/A 20% 12)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A manufacturer with a MARR of 20% is considering the installation of one of three packaging
machines. The economic parameters of each machine are as follows:
Packaging machine:
Initial cost ($)
Uniform annual benefit ($)
Uniform annual O&M cost ($)
X
Y
20,000
40,000
120,000 180,000
70,000
50,000
6
Service life (years)
3
Salvage value end of life ($) 2,000 4,000
Z
15,000
100,000
70,000
12
2,000
Which choice below gives the correct PW equation for machine X over the appropriate analysis
period?
O PW (costs) = $20k + $20k (P/F,20%,6) + $70k (P/A,20%, 12) - $2k (P/F,20%,6) - $2k (P/F,20%,12)
NPW = [ $120k (P/A,20%, 12) ] - [ $20k + $20k
(P/F,20%,6) + $70k (P/A, 20%, 12) - $2k (P/F,20%,6) - $2k (P/F,20 %,12)]
PW (benefits) = $120k (P/A,20%, 12)
O NPW = ($120k-$70k) (P/A,20%,12)

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