Because it fumes at room temperatures, hydrochloric acid creates a very corrosive work environment. A machine working in thatenvironment is deteriorating quickly and can be used for only one more year, at which time it will be scrapped with no salvage value. Itwas purchased 3 years ago for $88,000, and its operating cost for the next year is expected to be $48000. A more corrosion-resistantchallenger will cost $196000 with an operating cost of $48000 per year. It is expected to have a $55000 salvage value after its 10-year ESL. At an interest rate of 13.00% per year, what minimum replacement value would render the challenger attractive?The minimum replacement value that would render the challenger attractive is $

1. Information Provided by the Present Machine (Defender):has one year left to live.$48,000 is the…

Answered: Because it fumes at room temperatures,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Because it fumes at room temperatures, hydrochloric acid creates a very corrosive work environment. A machine, working in that environment, is deteriorating fast and can be used for only 1 more year, at which time it will be scrapped with no salvage value. It was purchased 3 years ago for $88,000; its operating cost for the next year is expected to be $53,000. A more corrosion-resistant challenger will cost $226,000 with an operating cost of $48,000 per year. It is expected to have a $60,000 salvage value after its 10-year ESL. At an interest rate of 15% per year, what minimum replacement value would render the challenger attractive?
Last year, a decision was made to keep the same equipment in lieu of buying new equipment. The old equipment's trade-in value last year was $4000 and its value this year is $2000. The operating cost was $700 last year. If bought last year, the new equipment would have cost $11K, the salvage value after 8 years would be $2000, and it would have an annual operating cost of $4000. If bought last year, what would have been the EUAC of the new equipment (in dollars) at 17% interest rate per year? (provide your answer in the box as a negative value if you arrive at costs) What would have been the correct decision? (provide your answer and justification in your pdf file submission)
Because it fumes at room temperatures, hydrochloric acid creates a very corrosive work environment. A machine working in that environment is deteriorating quickly and can be used for only one more year, at which time it will be scrapped with no salvage value. It was purchased 3 years ago for $88.000, and its operating cost for the next year is expected to be $57,000. A more corrosion-resistant challenger will cost $212,000 with an operating cost of $55.000 per year. It is expected to have a $50.000 salvage value after its 10- year ESL At an interest rate of 11% per year, what minimum replacement value would render the challenger attractive? The minimum replacement value that would render the challenger attractive is $[
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Because it fumes at room temperatures, hydrochloric acid creates a very corrosive work environment. A machine working in that environment is deteriorating quickly and can be used for only one more year, at which time it will be scrapped with no salvage value. It was purchased 3 years ago for $88,000, and its operating cost for the next year is expected to be $49,000. A more corrosion-resistant challenger will cost $206,000 with an operating cost of $46,000 per year. It is expected to have a $50,000 salvage value after its 10-year ESL. At an interest rate of 8% per year, what minimum replacement value would render the challenger attractive? The minimum replacement value that would render the challenger attractive is $ .
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Salim Service company owns several taxis that were purchased four years ago for $27000 each. The current market value is $10000 each. If they are kept for another 6 years, they can be sold for $2000 each. The annual maintenance cost per cab is $900 a year. Salim Service is looking at replacing the cabs with the option to lease new cabs at an annual cost of $9000 per year per cab which includes free maintenance. How much more would it cost them per year to switch to leasing? Assume an interest rate of 9%.
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a machine cost 73500 and has a life of 8 years with a salvage value of 3500 at the end of 8 years. determine the book value at the end of 5 years using the straight line methoed
QUESTION 3 Because it fumes at room temperatures, hydrochloric acid creates a very corrosive work environment. A machine working in that environment is deteriorating quickly and can be used for only one more year, at which time it will be scrapped with no salvage value. It was purchased 3 years ago for $88,000, and its operating cost for the next year is expected to be $57,000. A more corrosion-resistant challenger will cost $212,000 with an operating cost of $55,000 per year. It is expected to have a $50,000 salvage value after its 10- year ESL. At an interest rate of 11% per year, what minimum replacement value would render the challenger attractive? The Replacement Value, (in $)
Hydrochloric acid, which fumes at room temperatures, creates a very corrosive work environment. A mixing machine working in this environment is deteriorating fast and can be used for only 1 more year, at which time it will be scrapped. It was purchased 3 years ago for $88, 000 and its operating cost for the next year is expected to be $67,000. A more corrosion-resistant challenger will cost $226,000 with an operating cost of $54,000 per year. It is expected to have a $ 60,000 salvage value after its 10-year ESL. At an interest rate of 15% per year, what minimum trade - in value will make the challenger economically attractive? On equating the AW values of the defender and the challenger, to calculate the minimum trade - in value of the challenger, the spreadsheet tool that should be used is GOAL SEEK. The minimum trade - in value that will make the challenger economically attractive will be $54, 703.96. Give correct answer Hydrochloric acid, which fumes at room temperatures, creates a…

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