Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards more efficiently. The punch has afirst cost of $150,000 and a useful life of 15 years. At the end of its useful life, the punch has no salvage value. Labor costs wouldincrease $1,000 per year using the gang punch, but raw material costs would decrease $14,500 per year. MARR is 5%/year.Part aWhat is the internal rate of return of this investment?%Carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is ±0.2.Save for LaterPart bAttempts: 0 of 3 used Submit Answer

To find the internal rate of return (IRR) for the investment in the new gang punch, we need to use…

Answered: Bailey, Inc., is considering buying a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

If the IRR of Alternative A is 10%, the IRR of Alternative B is 8% and the MARR is 6%, which of the following is true? OAlternative B is preferred over Alternative A Alternative A is preferred over Alternative B Both alternatives are preferred over the do nothing alternative Both b and c are true
Most likely estimates for a project are as follows MARR Useful life Initial investment Receipts Expenses (R-E) Determine whether the statement "An initial investment of $3,450 is profitable." is true or false Click the icon to view the relationship between the PW and the percent change in parameter Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. Choose the correct choice below. False O True 10% per year 6 years $3,000 $1,000/year BIOD
Westdale Manufacturing is reviewing two mutually exclusive options for new equipment with a MARR of 16%. The lower cost option A has an initial cost of $100,000 with an annual savings of $25,000. The higher cost option B has an initial cost of $167.100 with annual savings of $35,000. Both have a service life of 10 years with no salvage value. Calculate the incremental rate of return AIRR (B-A) for this project.
An electric cooperative is considering the use of a concrete electric pole in the expansion of its power distribution lines. A concrete pole costs Php 18,000.00 each and will last 20 years. The company is presently using creosoted wooden poles which cost Php 12,000.00 per pole and will last 10 years. If money is worth 12%, which pole should be used? Assume annual taxes amount to 1% of first cost and zero salvage value in both cases.
Zoysia University must purchase mowers for its landscape department. The university can buy six EVF mowers that cost $8,400 each and have annual, year-end maintenance costs of $1,850 per mower. The EVF mowers will be replaced at the end of Year 4 and have no value at that time. Alternatively, Zoysia can buy seven AEH mowers to accomplish the same work. The AEH mowers will be replaced after seven years. They each cost $7,400 and have annual, year-end maintenance costs of $2,150 per mower. Each AEH mower will have a resale value of $900 at the end of seven years. The university’s opportunity cost of funds for this type of investment is 8 percent. Because the university is a nonprofit institution, it does not pay taxes. It is anticipated that whichever manufacturer is chosen now will be the supplier of future mowers. What is the EAC of each type of mower? (Your answers should be a negative value and indicated by a minus sign. Do not round intermediate calculations and round your answers…
Hospital is evaluating the purchase of new office equipment from three vendors. Assume MARR=15% and 4 year useful life on all equipment. Select best vendor. What is the best vendor?
Question 5 The second, Van Y, has a useful life of 10 years and will cost you $33,000 in Year 0. You expect it to earn the same additional $8,000 per year in profit, and have a salvage value of $5,000 at the end of Year 10. Using the coterminated assumptions and a study period of 15 years, what is the Future Worth of Van Y? Assume that you reinvest all cash flows at the MARR after the end of the useful life of the van. Typed numeric answer will be automatically saved.
A new highway is to be constructed. Design A calls for a concrete pavement costing $80 per foot with a 20-year life; four paved ditches costing $3 per foot each; and four box culverts every mile, each costing $10,000 and having a 20-year life. Annual maintenance will cost $1,600 per mile; the culverts must be cleaned every five years at a cost of $400 each per mile. Design B calls for a bituminous pavement costing $55 per foot with a 10-year life; four sodded ditches costing $1.40 per foot each; and four pipe culverts every mile, each costing $2,100 and having a 10-year life. The replacement culverts will cost $2,450 each. Annual maintenance will cost $2,600 per mile; the culverts must be cleaned yearly at a cost of $225 each per mile; and the annual ditch maintenance will cost $1.55 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a 20-year period. Find the most economical design on the basis of AW and PW if the MARR is 12% per year. Click the…
There are three alternatives X,Y,Z. With 10% MARR, which alternative should be chosen based on following conditions and why? For X, initial cost is $10k, yearly revenue is $6K, Salvage is $1k and useful life is calculated as 2yrs. For Y, initial cost is $15k, yearly revenue is $10K, Salvage is -$2k and useful life is calculated as 3yrs. For Z, initial cost is $12k, yearly revenue is $5K, Salvage is $3k and useful life is calculated as 4yrs.
Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards more efficiently. The punch has a first cost of $80,000 and a useful life of 15 years. At the end of its useful life, the punch has no salvage value. Annual labor costs would increase $6,000 using the gang punch, but annual raw material costs would decrease $12,000. MARR is 5.5% /year. What is the present worth of this investment?
Solve it clearly and correctly please. I will rate.
There are two alternatives P,M. With 15% MARR under 20 years study period, which alternative should be chosen based on the following conditions and why ? For P, initial cost is $14k, yearly cost is $14k, Salvage is $8k and useful life is calculated as 5 years. For M, initial cost is $65k, yearly revenue is $9k, Salvage is $13k and useful life is calculated as 20 years.

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS