AnnualIncomeAnnualfromInstalled Operating Mercury SalvageValueBidderCostCostRecoveryFoxhillInstrument$ 35,000$8000$2000$20,000QuicksilverAlmaden40,000100,0007000220035002000If the installation will last 20 years and money isworth 7%, which equipment should be purchased?

here we calculate the Annual Worth of the bidder by using the given data , so the calculation of the…

Annual Income Annual from Installed Operating Mercury Salvage Bidder Cost Cost Recovery Value Foxhill Instrument $ 35,000 $8000 $2000 $20,000 Quicksilver Almaden 40,000 7000 2200 100,000 2000 3500 If the installation will last 20 years and money is worth 7%, which equipment should be purchased?

Annual Income Annual from Installed Operating Mercury Salvage Bidder Cost Cost Recovery Value Foxhill Instrument $ 35,000 $8000 $2000 $20,000 Quicksilver Almaden 40,000 7000 2200 100,000 2000 3500 If the installation will last 20 years and money is worth 7%, which equipment should be purchased?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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9-83 Assume a cost improvement project has only a first cost of $100,000 and a monthly net savings, M. There is no salvage value. Graph the project's IRR for payback periods from 6 months to the project's life of N years. The firm accepts projects with a 2- year payback period or a 20% IRR. When are these standards consistent and when are they not? (a) Assume that N = 3 years. (b) Assume that N = 5 years. (c) Assume that N = 10 10 years. (d) What recommendation do you have for the firm about its project acceptance criteria?
8- The life of a project is 10 years. An equipment is needed for this project. Two alternatives are available. Equipment A has an initial cost of $5000.00, an annual maintenance cost of $300.00, and a salvage value of $800.00 after 5 years. Equipment B has an initial cost of $7000.00, an annual maintenance cost of $400.00, lasts for 10 years and has no salvage value. If the interest rate is 6%: a) Equipment A should be purchased. b) Equipment B should be purchased. c) No equipment should be purchased. d) There is no difference in choosing between A or B.
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8-23 Three mutually exclusive projects are being considered:
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A used machine costs $22681 to purchase . It has an annual maintenance cost of $ 10000 , a salvage of $ 5000, and a 13 year life. If the interest rate is 3% per year , compounded annually, what is the present worth cost of the machine?