A remotely located air sampling station can be powered by solarcells or by running an above ground electric line to the site andusing conventional power. Solar cells will cost $17,200 to installand will have a useful life of 5 years with no salvage value.Annual costs for inspection, cleaning, and other maintenanceissues are expected to be $2,000. A new power line will cost$25,500 to install, with power costs expected to be $1,000 peryear. Since the air sampling project will end in 5 years, thesalvage value of the line is considered to be zero.At an interest rate of 10% per year and using an AW analysis, what must be thefirst cost of the above ground line to make the two alternatives equally attractiveeconomically?The first cost of the above ground line to make the two alternatives equallyattractive economically is $-1

The equilibrium cost of two projects refers to the point at which the costs associated with both…

Answered: A remotely located air sampling station…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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In desalting groundwater that contains a significant amount of sulfates, the concentrate that is generated during the desalting process can sometimes be tough on equipment, so the equipment’s useful life is uncertain. For a treatment train that has an initial cost of $90,000 and an estimated operating cost (OC) between $15,000 and $20,000 per month, use a spreadsheet to determine how many months the equipment must last to recover the investment at i = 0.5% per month at each OC value? Assume the income from the sale of calcium sulfate is $22,000 per month. (Note: Solve using increments of $1000 OC per month.)
Oil from a specific type of marine microalgae can be converted into biodiesel that may serve as an alternate transportable fuel for automobiles and trucks. If lined ponds are used to grow the algae, the construction cost is $12 million and the M&O cost is estimated at $1.6 million per year. Alternatively, if long plastic tubes are used for growing the algae, the initial cost will be higher at $16 million, but less contamination will render the M&O cost lower at $0.4 million per year. At an interest rate of 10% per year and a 5-year project period, which system is better—ponds or tubes? Use a present worth analysis. The present worth of lined ponds is $ ____million and that of plastic tubes is $ ____million. ____ (Lined ponds or plastic tubes) are used to grow algae.
Solar and conventional power alternatives are available to provide energy for monitoring equipment at a remote irrigation canal site. The estimates associated with each alternative have been developed. Use the B/C method to select one at an interest rate of 7% per year over a 5-year study period. One of the alternatives must be selected. Alternative Conventional Solar Initial cost, $ 200,000 1,300,000 Annual power cost, $/year 80,000 9,000 Salvage value, $ — 150,000
A remotely located air sampling station can be powered by solar cells or by running an above ground electric line to the site and using conventional power. Solar cells will cost $17,400 to install and will have a useful life of 5 years with no salvage value. Annual costs for inspection, cleaning, and other maintenance issues are expected to be $2,100. A new power line will cost $26,000 to install, with power costs expected to be $1,000 per year. Since the air sampling project will end in 5 years, the salvage value of the line is considered to be zero. NOTE: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part.At an interest rate of 10% per year and using an AW analysis, which alternative should be selected? The annual worth of installing solar cells is $− , and the annual worth of installing a new power line is $− . The alternative to be selected is .
Jones Excavation Company is planning an investment of $233,500 for a bulldozer. The bulldozer is expected to operate for 2,000 hours per year for eight years. Customers will be charged $120 per hour for bulldozer work. The bulldozer operator costs $37 per hour in wages and benefits. The bulldozer is expected to require annual maintenance costing $20,000. The bulldozer uses fuel that is expected to cost $48 per hour of bulldozer operation. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192
Sheep Ranch Golf Academy is evaluating new golf practice equipment. The "Dimple- Max" equipment costs $110,000, has a 4-year life, and costs $9,100 per year to operate. The relevant discount rate is 12 percent. Assume that the straight-line depreciation method is used and that the equipment is fully depreciated to zero. Furthermore, assume the equipment has a salvage value of $8,300 at the end of the project's life. The relevant tax rate is 24 percent. All cash flows occur at the end of the year. What is the equivalent annual cost (EAC) of this equipment? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) EAC
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A proposed building may be roofed in either composition roofing (C) or galvanized steel sheet (S). The composition roof costs $56,000 and is replaced every 5 years (assume at the same cost). The steel roof costs $68,000 but the useful life is very long. Neither roof has any salvage value, nor is maintenance needed. If the MARR is 10%, what minimum life must the steel roof have to make it the better alternative? (Report to the nearest whole year; don't bother interpolating.)

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