An investment of $20,000 in new equipment will generate income of $7000 per year for 3 years, at which time themachine can be sold for an estimated $8000. If the company's MARR is 15% per year, the equation that can be used tosolve for i* is: 0 = -20,000 + 7000(P/A.I*.3) + 8000(P/F.i*.3)Select one:O TrueO FalseThe PW method allows analysis over the respective alternative lives.Select one:O TrueO FalseIn a DBOMF contract arrangement, the contractor is responsible for managing the cash flow to support projectimplementation; not the funding (capital funds) aspects. In DBOM contracts, this management responsibility is notplaced on the contractor.Select one:O TrueO False12:20 PMdalEAMC

Initial investment = 20,000 Annual Revenues = 7,000 Salvage value = 8,000 Life = 3 years MARR = 15%

Answered: An investment of $20,000 in new…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(2) If the initial investment on the equipment is 25000 and it will have a salvage value of 5000 at the end of 5 years. It will save 8000 per year for the study period. Is it worthwhile to install the equipment? Justify it by using Future Worth (FW) formulation when MARR is 20%
A firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines make the firm’s production process more efficient which in turn increases incremental cash flows. The GSU-3300 produces incremental cash flows of $24,998.00 per year for 8 years and costs $99,590.00. The UGA-3000 produces incremental cash flows of $29,475.00 per year for 9 years and cost $126,038.00. The firm’s WACC is 8.32%. What is the equivalent annual annuity of the GSU-3300? Assume that there are no taxes.
A 50m2 apartment is for sale for $50,000 down payment plus $100,000 at the end of 1 year. The seller even offers the cash payment opportunity for which he asks for $124,000. If the market interest rate is 2.5% per month, what is the best alternative?
A young man bought a second hand car for P150,000.00 in cash. The owner of the car agreed to be paid on instalment basis with a downpayment of P50,000.00, P30,000.00 after the end of one year, P40,000.00 at the end of second year and the final payment to be made after 4 years. Determine the final payment if money is worth 15% per annum
A consulting engineering firm is considering two models of SUVs for the company principals. A GM model will have a first cost of $36,000, an operating cost of $4000, and a salvage value of $15,000 after 3 years. A Ford model will have a first cost of $32,000, an operating cost of $3100, and also have a $15,000 resale value, but after 4 years. (a) At an interest rate of 15% per year, which model should the consulting firm buy? Conduct an annual worth analysis. (b) What are the PW values for each vehicle? 10 16 -22)
An investment carns P50,000 at the end of the 1st year and decreases by P5,000 every year thereafter. It has also been predetermined that a fixed annual cost of P5,000 is spent for maintenance and repairs. If the life of the investment is 10 years, determine whether this is a good investment assuming an investment cost of P162,049 and carning 10% per year. (25) #1: Annual method.
Virgin Galactic is considering two materials for certain parts in a re-useable space vehicle: carbon fiber reinforced plastic (CFRP) and fiber reinforced ceramic (FRC). The costs are shown below. Which should be selected on the basis of a present worth comparison at an interest rate of 10% per year? Solve using (a) tabulated factors, and (b) single-cell spreadsheet functions.
Two investments totaling $60,000 produce an annual income of $3410. One investment yields 5% per year, while the other yields 6% per year. How much is invested at each rate?
Don't Use Excel function. Need Handwritten /Typed based solution using formula. Please Solve as fast as.
the first cost of an electric rebar bender is P306,000 and a salvage value of P40,000 at the end of its life for 4 years. money is worth 5.6% annually. if there is no salvage value and the annual maintenance cost is P18,000 find the annual cost of perpetual service.
Construct a cash flow diagram that represents the amount of money that will be accumulated in 7 years from an initial investment of $24,000 now and $2,750 per year for 7 years at an interest rate of 10.00% per year. (Please upload your response/solution using the controls below.)
A COMPANY IS STUDYING TO UPGRADE THEIR EQUIPMENT IN ORDER TO REDUCE COST BY P40,000.00 PER YEAR. COST OF EQUIPMENT IS P300,000.00, WITH SALVAGE VALUE OF P50,000.00 AND 7 YEARS LIFE. MAINTENANCE COST IS P6000.00/YEAR. WHILE THE MACHINE IS NOT IN USE, IT CAN ALSO EARN ANOTHER P10,000.00/YEAR IN RENTAL. IF THE CAPITAL CAN BE INVESTED AT 8% RETURN, IS THE COMPANY JUSTIFIED IN BUYING THE EQUIPMENT? WHY? USE RATE OF RETURN METHOD WHEN SOLVING

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