An industrial engineer has estimated that a processing machine will need repairs in years two through five that will cost $50,000.00 per year, but no additional repairs will be required after year five. If the machine is used for 12 years and the interest rate is 7%, what is the equivalent uniform annual cost of the repairs?
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- Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.Conestoga Plumbing plans to invest in a new pump that is anticipated to provide annual savings for 10 years of $50,000. The pump can be sold at the end of the period for $100,000. What is the present value of the investment in the pump at a 9% interest rate given that savings are realized at year end?A grocery store is considering the purchase of a new refrigeration unit with an Initial Investment of $412,000, and the store expects a return of $100,000 in year one, $72000 in years two and three, $65,000 in years four and five, and $38,000 in year six and beyond, what is the payback period?
- If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?A company is considering buying a new piece of machinery. the initial cost of the machine is 80,000 and its salvage value is 20,000 at the end of 20 years. annual operating cost is 18,000. what is the equivalent uniform annual cost of the machine based on 10% interest rate?An electronic device is available that will reduce this year’s labor costs by $8,000. The equipment is expected to last for 10 years. Labor costs increase at a rate of 5% per year and the interest rate is 10% per year. Solve, a. What is the maximum amount that we could justify spending for the device? b. What is the uniform annual equivalent value (A) of the labor costs over the eight-year period?
- A construction firm needs a new small loader. It can be purchased for $20,000. The firm expects the loader to have a salvage value of $6,000 after 7 years. The maintenance cost will be $1,400 each year. The firm's interest rate is 1% per year. Compute the Equivalent Uniform Annual Worth (EUAW).The expenses included in the fabrication of a wind turbine for a planned Wind Farm is $73,000 annually. A wise Electrical Engineer developed an alternative that by spending $16,000 now to modify the rotor blades and adjust the gear box, the yearly cost will decrease to $58,000 next year and $52,000 at the end of year 2 until 5. If the interest rate is 10% per year, what is the present worth of the cost savings because of the modification and adjustment?Consider a processing center that can be purchased at $25000 today and will have a 10 years of useful lifetime, in the end of which the processing center is expected to have a salvage value of $5000. The annual maintenance costs are expected to start at $600 at the end of the first year, and each year thereafter, will increase by 5% compared to the previous year. Instead of owning this processing center, if we intend to lease it for 10 years at a constant annual rental, what is the fair rental amount under an 8% MARR that compounds annually? Choose the closest value to your answer. A) $4990.39 B) $4112.35 $4344.76 D) $4776.33 E) $4501.62
- An asphalt road requires a yearly maintenance beginning a year from now. For the 1st four years, it will be P 539,853 per year. For the next four years, it will be P 1,126,841 per year. On the succeeding four years, it will be 1,021,631 per year. If interest is 20% cpd. annually, what is the present value of the repair cost?The ABD Company is building a new plant, whose equipment maintenance costs are expected to be 25,000 the first year, 7,500 the second year, 10,000 the third year, 12,500 the fourth year, etc., increasing by 2,500 per year through the 10th year. The plant is expected to have a 10-year life. Assuming the interest rate is 8%, compounded annually, how much should the company plan to set aside now in order to pay for the maintenance? Draw cash flow diagramA new machine for your company has a first cost of $80,000 and an estimated net salvage value of $15,000 at the end of 20 years. It is expected to have operating and maintenance costs of $3,000 per year, and it is expected to reduce costs by $5,000 per year. Assume an interest rate of 8%. What is the annual equivalent cost of the investment if the planning horizon is 20 years?