Potable water is in short supply in manycountries. To address this need, two mutuallyexclusive water purification systems are being consideredfor implementation in China. Doing nothing is not anoption. Refer to the data below and state your keyassumptions in working this problemSystem 1 System 2Capital investmentAnnual revenues$150,000 s70,000$100,00050,00022,00020,000Annual expenses40,000MV at end of useful life0.Useful life5 years10 yearsIRR16.5%15.1%a. Use the PW method to determine which system shouldbe selected when MARR = 8% per year.b. Which system should be selected when MARR 15%per year?%3D

cation systems are being con n China. Doing nothing is e data below and state yc ng this problem System 1 System $150,0 $100,000 50,000 22,000 nt 70,00 40,00 20,000 5 years 16.5% ful life 10 yea 15.1% d to determine which system MARR = 8% per year. %3D ıld be selected when MARR

cation systems are being con n China. Doing nothing is e data below and state yc ng this problem System 1 System $150,0 $100,000 50,000 22,000 nt 70,00 40,00 20,000 5 years 16.5% ful life 10 yea 15.1% d to determine which system MARR = 8% per year. %3D ıld be selected when MARR

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: ligthing first cost of investment is $120,000. annual mtnce expenses are expected to be $6600 for…

A: In this question we have to find out the capitalized cost with the help of the above information.

Q: QUESTION 7 for th below two machines and based on cC analysis which machine we should select?…

A: A capitalized cost is a cost incurred as a result of the purchase of a fixed asset that is expected…

Q: An investment of P2, 700, 000 can be made in a project that will produce a uniform annual revenue of…

A: Engineering economics, formerly engineering economy, is a branch of economics concerned with the…

Q: A start up business is considering two types of equipment - data are as follows: TYPE A TYPE B First…

A: Given that; Type A Type B Initial cost= P200,000 Initial cost= P300,000 Annual Operating…

Q: Given the two machines data Machine A Machine B First Cost P8.000.00 P14,000.00 Salvage value…

A: The net gain or loss on an investment over a specific time period represented as a percentage of the…

Q: A young engineer is considering to built a 25unit apartment near a commercial center. Because of the…

A: Given, Occupancy rate- 90% Earning rate- 20%

Q: Compare two alternatives, A and B, on the basis of a present worth evaluation using / = 8% per year…

A: The present worth of an annuity is the current value of future payments from an annuity, given a…

Q: PLS HELP ASAP ON BOTH

A: 1. The conflict of interest that should be avoided is:Arilla's client, Gwen, wants to co-invest with…

Q: 1) Consider the follows Projects: If MARR- 17%. Recommend the best choice based upon ROR analysis: с…

A: To perform incremental rate of return analysis the condition of equal service life requirement must…

Q: Anew highway is to be constructed. Design A calls for a concrete pavement costing $05 per foot with…

A: The measure that depicts the equivalent annual worth of all receipts and costs being estimated…

Q: For the cash flow below Find the Future A= 185000 Quarterly retur O 1 2 3 4 5 A- 270000 annual…

A: Given, There are 2 annuities. As no rate of interest is mentioned, the following question has been…

Q: 5. For the cash flows shown below, use an annual worth comparison to determine which alternative is…

A: Given: The Rate of Interest = 12% To Find: The best alternative using annual worth comparison

Q: A bond with a face value of $1000 can be purchased for $800. The bond matures in 5 years and the…

A: Effective interest rate on the bond will be the summation of rate of return on capital as per…

Q: Four projects are given in the table below. Assume MARR = 12% and n = 8 for all projects shown. B C…

A: Note: Since the question contains more than three subparts, we are going to answer either the first…

Q: Given the two machines' data First Cost Salvage value Annual operation Annual maintenance Taxes and…

A: Introduction The equivalent annual cost (EAC) method is a strategy employed when choosing an…

Q: Compute for the Annual Worth of MEA1 and explain. Compute using the Annual Worth formula and WITHOUT…

A: r= 12%

Q: What is the total cost and benfits of Present and NPV for at 5% Interest? and what is the PV of…

A: The total cost of the project can be calculated by summing up all the costs incurred over the…

Q: Solar panels can be used to prewarm the water fed to a conventional home water heater. The solar…

A: The method of calculation of the rate of return of investment is known as the internal rate of…

Q: 2.) Three mutually exclusive design alternatives are being considered. The estimated cash flows for…

A: Since you have posted multiple questions as per the guidelines we can solve only 1 question at a…

Q: Consider the following options and information provided. Which alternatives, if any, should not be…

A: When we use the internal rate of return method to compare the alternative, then the alternative…

Q: Determine feasibility of the project using FW Method. Use MARR = 10%. %3D Alternatives А В C Capital…

A: A B C D Initial Cost 150000 85000 75000 12000 Annual Revenue 28000 16000 15000 22000 Annual…

Q: Three mutually exclusive design alternatives are being considered. The estimated cash flows for each…

Q: 1) Consider the follows Projects: If MARR= 17%. Recommend the best choice based upon ROR analysis: C…

A: Given Cash flow Cash flow Year Project A Project B Project C Project D 0 -500 -1000 -800…

Q: Three mutually exclusive design alternatives are being considered. The estimated cash flows for each…

A: Present value refers to the concept that states an amount of money today is valued more than that…

Q: What is the best alternative using incremental Analysis? Use MARR = 15% A B C Capital Investment $…

A: Incremental Analysis Approach Assuming MARR=15% Formula= (Annual benefit-Cost)*PVAF+Salvage…

Q: If the MARR is 12%, compute the value of X that makes the following two alternatives equally…

A: Present value is the value of investment in today's dollar Future value is the value of investment…

Q: For the following cash flow series, a. Show both hand and spreadsheet solutions that calculate the…

A: When analysing investment possibilities in financial analysis, it is crucial to take uncertainties…

Q: 3) A and B are mutually exclusive projects. What MARR has to be for A to be chosen? A. B. Initial…

A: Mutually Exclusive Projects is the term which is utilized commonly in the capital planning process…

Q: For aternatives shown in the table below and on the basis of their capitalized.costs. CC and an…

A: Here we calculate the capitalized cost of the both machines by using the given information , so the…

Q: Calculate the present worth of all costs for a newly acquired machine with an initial cost of…

A: Formula for the ordinary annuity is given as:M * 1-1(1+r)nrM: Annuity value r: rate of interestn:…

Q: Time left 1:24:36 FW analysis comparison of altematives is different from PW analysis. For example:…

A: "Since you have asked multiple questions, we will solve first question for you .. If you want any…

Q: For th below two machines and based on AW analysis which machine we should select? MARR=10% Machine…

A: Equal service life criteria do not require while selecting alternatives using the annual worth…

Q: An NGO is considering building a school for children in a community with 200 children. Assume that…

A: Social value per child going school = 2000 Total Additional social value with construction of new…

Q: 2- Find Profit for the project, which its cash flow is shown below 95 x 10 700,000 U دفعات شهرية 0 0…

A: The total cash and cash equivalents received and expended by a company are referred to as its cash…

Q: Referring to the following cumulative cash flow diagram, salvage value is most nearly ERY $500000…

A: The term "cumulative cash flow" can be applied to both projects and businesses. A company's or…

Q: For the below ME alternatives , which machine should be selected based on the AW analysis. MARR=109…

A: Answer.

Q: ial cost, $ nual income, $ per year -150,000 -250,000 20,000 40,000 nual expenses, $ per year 24…

A: For alternative ‘J’ Given, Initial cost = -250,000 Annual income = 40,000, Annual expense = -14,000…

Q: MARR is 8.4 % 3500 4000 4500 Year 5000 5500 6000 6500 7000 1000 1500 22000 6000 2000 5600 2500 5200…

A: Cash flow diagram:-A diagram that shows the value of future money. In a project's financial records,…

Q: for th below two machines and based on CC analysis which machine we should select? MARR=10% Machine…

A: There are two alternatives, Machine A and Machine B. Machine A has a 3-year service life and Machine…

Q: Capital investment $100,000 Annual revenues $30,000 Annual expenses $9,000 Market value $10,000…

A: Given information Initial capital=$100000 Annual revenue=$30000 Annual expenses=$9000 Market…

Q: for th below two machines and based on CC analysis which machine we should select? MARR=109%.…

A: Salvage value is the estimated book value of an asset after depreciation is complete, based on what…

Q: The two systems are considered for a project. Suppose MARR is at 10% per year, determine how many…

A: The electricity rate cost is Php 0.08/KwH. The MARR is 10%. The table containing the information…

Q: Economics A new machine can be purchasedfor$80,000. Its expected useful life is 5 years, at which…

A: Note: Since this question has more than four subparts, we are not allowed to answer more than four…

Question

Potable water is in short supply in many
countries. To address this need, two mutually
exclusive water purification systems are being considered
for implementation in China. Doing nothing is not an
option. Refer to the data below and state your key
assumptions in working this problem
System 1 System 2
Capital investment
Annual revenues
$150,000 s
70,000
$100,000
50,000
22,000
20,000
Annual expenses
40,000
MV at end of useful life
0.
Useful life
5 years
10 years
IRR
16.5%
15.1%
a. Use the PW method to determine which system should
be selected when MARR = 8% per year.
b. Which system should be selected when MARR 15%
per year?
%3D

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

2. Two alternatives, a flexible manufacturing cell and fixed automation, have different cost and revenue characteristics as follows: Flexible Cell Fixed Automation Investment S2,500,000 б уears S800,000 in first year; increasing by $100,000 each year thereafter $300,000/year $1,500,000 3 years S800,000/year Life Gross cash savings s100,000 in the first year; decreasing to S80,000 in second year and S70,000 in third year Cash disbursement MARR 20% 20% Assuming "repeatability" and service needed for 6 years, show which alternative is preferred using the method of rate of return.
Help....
1.) What are the 3 assumptions that must be considered when using the LCM approach in comparing PW of differentlife alternatives? Question 2 in image, thank you.
27) For the following alternatives, (a) find the maximum cost you can spend on alternative A to break even with alternative B if the interest rate is 10% per year. (b) repeat A following expected lives, 5, 8, 10, 12, 15 years using Spreadsheet and Goal seek tool.
Littrell's Nursery needs a new irrigation system. System one will cost $145,000, have annual maintenance costs of $10,000, and need an overhaul at the end of year six costing $30,000. System two will have first year maintenance costs of $5,000 with increases of $500 each year thereafter. System two would not require an overhaul. Both systems will have no salvage value after 12 years. If Littrell's cost of capital is 4%, using annual worth analysis determine the maximum Littrell's should be willing to pay for system two.
110 0 Le000 & (0) A 200 B 3000 2000 らoo0 2800 5000 9f MARR=SI. MARR=81. O x & Y ? MARR = 101 Initial Cost Annual benefit 95|120 Sal vage Value 50 150 use bul libe DO Nothinglon) 3. 200 700 6 yean 12yng
For the project with cash flow given below find the most sensitive factor among annual benefit, annual cost and salvage value if the changes by ±20%. Initial investment Annual revenue Annual Cost Salvage Value MARR Life in years Project Rs.2,00,000 Rs.1,00,000 Rs. 40,000 Rs. 50,000 10% 5
A sportswear factory has two alternative machines for producing jerseys. Costs are shown below. Minimum acceptable rate of return is 8%.What is the annual cost for machine Y?
Plz solve in 1/2 hour it's urgently need
FIRST COST ANNUAL COST SALVAGE VALUE ANNUAL INTEREST RATE STUDY PERIOD Power Line 20,000 1,950.90/month × 12= 23,410.8/year Solar 25,000 X 7= 125,000+10,000= 135,000 3,000/year 0 3.5% 25 ALTERNATIVE A: A solar panel costs 25,000. 7 solar panels are needed in a company. The installation fee is 10,000 and will have a useful 25 years with no salvage value. The maintenance per year is 5,000. The annual interest rate for solar panel is 1.5%. 0 1.5% 25 ALTERNATIVE B: A new power line will cost 20,000, with power costs expected to be 1,950.90 per month. The annual increase rate of electric bill is about 3.5%. Which alternative should be selected on the basis of a future worth analysis? Illustrate the cash flow diagram. USE MS EXCEL IN COMPUTATION and SHOW THE SOLUTION PROPERLY.
11
Engr. Collado is using a 10% annual interest rate to decide if it should by cement mixer A with a gasoline engine or Cement Mixer B with a diesel engine. Equipment A Equipment B INITIAL COST Php 57500 Php 85800 LIFESPAN 10 years 10 years ANNUAL OPERATING COST Php 18000 Php 18000 ANNUAL REPAIR COST Php 20000 Php 10000 SALVAGE VALUE Php 0 Php 19000 Which of the two is more economical in the long run?