An injection molding system has a first cost of $180,000 and an annual operating cost of $84,000 in years 1 and 2,increasing by $5,000 per year thereafter. The salvage value of the system is 25% of the first cost regardless of when thesystem is retired within its maximum useful life of 5 years. Using a MARR of 15% per year, determine the ESL and therespective AW value of the system. via spreadsheet that graphs the total AW and its components

The objective of this question is to determine the Economic Service Life (ESL) and the Annual Worth…

Answered: An injection molding system has a first…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $45,000 with $3,500 salvage value after 16 years. The other can be purchased and installed for $95,000 with $3,000 salvage value after 16 years. Operation and maintenance for each is expected to be $21,500 and $14,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table. Determine which alternative is less costly, based upon comparison of after-tax annual worth. Show the AW values used to make your decision: Conveyor 1: $ Conveyor 2: $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±10. What must the cost of the second (more expensive) conveyor be for there to be no economic…
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Required information For equipment that has a first cost of $17,000, the estimated operating costs and year-end salvage values are as shown. Year Operating Cost, $ Salvage Value, $ 1 -1,000 7,000 2 -1,200 5,000 3 -1,300 4,500 4 -2,000 3,000 5 -3,000 2,000 Write the PMT function to determine AW for year 4, if net operating costs are entered into cells B2 through B6. (Please upload your response/solution using the controls below.)
An industrial machine costing $10,000 will produce net cash savings of $4,000 per year. The machine has a five-year useful life but must be returned to the factory for major repairs after three years of operation. These repairs cost $5,000. The company's MARR is 10% per year. What IRR will be earned on the purchase of this machine? Analyze the sensitivity of IRR to ± $2,000 changes in the repair cost. Perform the sensitivity analysis. Fill-in the table below. (Round to one decimal place.) Change in the repair cost - $2,000 $0 IRR 21.05% 9.61 % Is the project acceptable? Yes No
Based on company records of similar equipment, a consulting aerospace engineer at Aerospatiale estimated AW values for a presently owned, highly accurate steel rivet inserter as shown. A challenger has ESL = 2 years and AWC= $−41,300 per year. The MARR is 12% per year. If Retained ThisNumber of Years The AW Value Is,$ per Year 1 −62,000 2 −51,000 3 −49,000 4 −53,000 5 −70,000 When should the next replacement evaluation take place, and under what assumption? The next replacement evaluation should take place in (Click to select) 4 2 3 5 years, and under the assumption that the (Click to select) defender challenger estimates do not change.
Ctrl 24 Calculate the perpetual equivalent annual cost (years 1 through infinity) of $5 million in year 0, $2 million in year 10, and $100,000 in years 11 through infinity. Use an interest rate of 10% per year. 27 A new bridge across the Allegheny River in Pittsburgh is expected to be permanent and will have an initial cost of $30 million. This bridge must be resurfaced every 5 years at a cost of $1 million.
A portable concrete test instrument used in construction for evaluating and profiling concrete surfaces (MACRS-GDS 5-year property class) is under consideration by a construction firm for $24,000. The instrument will be used for 6 years and be worth $1,000 at that time. The annual cost of use and maintenance will be $11,000. Alternatively, a more automated instrument (same property class) available from the manufacturer costs $28,500, with use and maintenance costs of only $7,500 and salvage value after 6 years of $2,500. The marginal tax rate is 25%, and MARR is an after-tax 12%.Determine which alternative is less costly, based upon comparison of after-tax annual worth. select an alternative Show the AW values used to make your decision:Alternative 1: $enter a dollar amount Alternative 2:
You work for Midstates Solar Power. A manager asked you to analyze the following two machines. Machine Semi has a first cost of $50,000 and an operating cost of $15,000 in year 1, increasing by $1500 every two years through year 6, after which time it will have a salvage value of $10,000. Machine Auto has a first cost of $50,000 and an operating cost of $20,000 in year 1, increasing by 5% per year through year 6, after which time it will have a salvage value of $15,000. Utilize an interest rate of 12% per year to determine both estimates. a) Which machine will have the lower capital recovery cost? b) Which machine will have the lower equivalent annual total cost?

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