Apricot Computers is considering replacing its material handling system and either purchasing or leasinga new system. The old system has an annual operating and maintenance cost of $33,000, a remaining lifeof 8 years, and an estimated salvage value of $4,800 at that time.A new system can be purchased for $284,000; it will be worth $26,000 in 8 years; and it will have annualoperating and maintenance costs of $17,000/year. If the new system is purchased, the old system can betraded in for $18,000.Leasing a new system will cost $24,000/year, payable at the beginning of the year, plus operating costs of$9,100/year, payable at the end of the year. If the new system is leased, the old system will be sold for$8,400.MARR is 16%. Compare the annual worths of keeping the old system, buying a new system, and leasing anew system based upon a planning horizon of 8 years.Click here to access the TVM Factor Table CalculatorFor calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answer to 2decimal places, e.g. 52.75. The absolute cell tolerance is ±1Part aWhat is the EUAC of the best option using the cash flow approach?

2. Cash Flow Analysis:a) Keep Old System:Annual Cash Flow = - Annual O&M Cost + Salvage Value…

Answered: Apricot Computers is considering…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Mr. Russ T. Steele sells his old vehicle for $5000 (you get more if you private salel) and pays cash for a used (but newer vehicle) that costs $10,000. He also understands that he needs to allow for maintenance and operation costs of his vehicle. He estimates that these costs will be approximately $2000 a year and estimates that the costs will increase by $100 per year. He hopes to keep the vehicle for five years and then sell it for an estimated value of $2000. Mr. Steele has an MARR of 8%. The present value of the cash flow associated with his purchase is most nearly: Oa. -$7,400 b.$-12,400 C $12,000 Od.-$15,100
! Required information An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $31,000, an annual operating cost (AOC) of $5,000, and a service life of 2 years. Method B will cost $71,000 to buy and will have an AOC of $3,500 over its 4-year service life. Method C costs $117,000 initially with an AOC of $3,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 7% of its first cost. Perform a present worth analysis to select the method at i = 9% per year. The present worth of method A is $ -114,678.6 The present worth of method B is $ -140,668.2 The present worth of method C is $ -132261.24 Method A is selected.
A factory manager bought a rare machine for $10 million. of the machine The sales value at the end of the first year will be $3 million and the machine will be sold by antique dealers. It is estimated to be valued at $500,000 due to the Initial cost of maintenance Expected to be $300,000 in 3 years and double each year thereafter. In this way, the maintenance cost of the 4th year is $600,000, the maintenance cost of the 5th year is $1,200,000, etc. will be. Calculate the economic life of this machine based on the Minimum Attractive Efficiency Ratio of 15%.
! Required information An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $40,000, an annual operating cost (AOC) of $12,000, and a service life of 2 years. Method B will cost $70,000 to buy and will have an AOC of $6,000 over its 4-year service life. Method C costs $125,000 initially with an AOC of $3,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 7% of its first cost. Perform a present worth analysis to select the method at /= 12% per year. The present worth of method A is $ The present worth of method B is $ The present worth of method C is $ ✓is selected. Method C
! Required information An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $41,000, an annual operating cost (AOC) of $13,000, and a service life of 2 years. Method B will cost $82,000 to buy and will have an AOC of $4,500 over its 4-year service life. Method C costs $117,000 initially with an AOC of $4,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 9% of its first cost. Perform a future worth analysis to select the method at i = 8% per year. The future worth of method A is $ 65,832.64 The future worth of method B is $ 98,183.44 The future worth of method C is $ 157,622.43 > Method с Return to question is selected.
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Apricot Computers is considering replacing its material handling system and either purchasing or leasing a new system. The old system has an annual operating and maintenance cost of $31,000, a remaining life of 8 years, and an estimated salvage value of $5,300 at that time. A new system can be purchased for $259,000; it will be worth $24,000 in 8 years; and it will have annual operating and maintenance costs of $16,000/year. If the new system is purchased, the old system can be traded in for $19,000. Leasing a new system will cost $25,000/year, payable at the beginning of the year, plus operating costs of $7,100/year, payable at the end of the year. If the new system is leased, the old system will be sold for $9,000. MARR is 15%. Compare the annual worths of keeping the old system, buying a new system, and leasing a new system based upon a planning horizon of 8 years. Click here to access the TVM Factor Table Calculator For calculation purposes, use 5 decimal places as displayed in the…
Mr. Garcia sold his machine for P20,000 after using it for 6 years. He bought a new machine worth 75,000 with an expected life of 12 years and a salvage value of 2,000. The operating cost is P5,500 per year. The old machine which he bought for P50,000 when new will be useful for 10 years and a junk value of 1,000 but because of appropriate maintenance, it will be useful for another 5 years, no salvage value, with an annual operating cost of twice the new one. If money is worth 12%, was the engineer justified in selling the old machine? Use the ROR method. Show complete solution. Thank you
5
Comparison of Alternative
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Matchim's Paving is investing in a new wider paving machine that will cost $131000, which is expected to return $22500 per year of the next 12 years. At the end of the 12 years the paving machine is expected to have a salvage value of $20000. Assuming the cash flow is at the end of the year, what is the Pay Back Period, in years, for the project?

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