cost $315,000 to purchase. Fuel, oil, grease, and minor maintenance are estimated to cost $53.50 per operating hour. A set of tires cost $16,000 to replace, and their estimated life is 3,100 use hours. A $17,000 major repair will probably be required after 6,200 hr of use. The machine is expected to last for 9,300 hr, after which it will be sold at a price (salvage value) equal to 13% of the original purchase price. A final set of new tires will not be purchased before the sale. How much should the owner of the machine charge per hour of use, if it is expected that the machine will operate 3,100 hr per year? The company's cost-of-capital rate is 7.25%.

cost $315,000 to purchase. Fuel, oil, grease, and minor maintenance are estimated to cost $53.50 per operating hour. A set of tires cost $16,000 to replace, and their estimated life is 3,100 use hours. A $17,000 major repair will probably be required after 6,200 hr of use. The machine is expected to last for 9,300 hr, after which it will be sold at a price (salvage value) equal to 13% of the original purchase price. A final set of new tires will not be purchased before the sale. How much should the owner of the machine charge per hour of use, if it is expected that the machine will operate 3,100 hr per year? The company's cost-of-capital rate is 7.25%.

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

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
You are trying to pick the least expensive car for your new delivery service. You have two choices: the Scion XA, which will cost $13000 to purchase and which will have a OCF of -$1,200 annually throughout the vehicle's expected life of three years as a delivery vehicle; and the Toyota Prius, which will cost $23,000 to purchase and which have a OCT of -$500 annually throughout the vehicle's expected 5-years life. Both cars will be worthless at the end of thier life. If you intend to replace whichever type of car you choose with the same thing when its life runs out, again and again out into foreseeable future, and if your business has a cost of capital of 12 percent, what is the difference in the EAC of the two cars?
Compute the annual equivalent repair cost over a 5 year life if a typewriter is warranted for 2 years and has estimated repair cost of $1000 annually. Use i = 10%. Shoe your solution.
Engineering Economics 00011 Please provide a step by step solution using ROR
SHOW COMPLETE SOLUTION PLS BADLY NEEDED ASNWERS
An automobile spare part is sold for $15 per unit. The VC are $3 per unit, 15000 units of the product are sold annually and a profit of $80,000 is made. The change to be made in the design of the product will increase the VC by 20% and the FC by 10%, and the sales amount will increase to 18000 units. a) At what selling price do we break even? b) What is the annual profit when the selling price remains the same ($12/unit)?
Current Attempt in Progress Mandy is considering investing in an opportunity that would require an upfront cost of $ 520 but would pay $ 150 per year for each of the next 6 years. If Mandy chooses to invest in this opportunity, what would be the IRR? Click here to access the TVM Factor Table calculator. Carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is ±0.5. Should Mandy invest in this opportunity if her personal MARR is 20%?
If APC is 0.75 and MPC is 1, how much will be APS.
What life insurance option has a lower premium, is only life insurance, and purchased for a specific period of time. (10, 15, 20 years)
Pierre Rizzo is considering purchasing a new car. The price of the car is $60000, and Pierre hopes to keep it 4 years and then sell it for $19000. Based on past experience, Pierre drives about 12,000 km per year and lives in a downtown apartment where they must pay a $63 per month parking fee.Pierre has budgeted the following automobile expense items for the next 4 years: Expense Gasoline(13.7L Per 100KM)($1.71 Per Liter) Licence/Registration Insurance Maintenance Tires ($1407 per set that last 42000KM) Parking (48 Months) Interest Depreciation (STRAIGHT LINE) Cost Fixed/Variable Variable $483 Fixed $3309 Fixed $960 Variable Variable $3024 Fixed $3090 Fixed Fixed CALCULATE THE FOLLOWING USING THE ABOVE INFORMATION: TOTAL FIXED COSTS (TFC) TOTAL VARIABLE COSTS (TVC) TOTAL KMS TOTAL COSTS (TC) 48000KM AVG. FIXED COSTS/KM AVG. VARIABLE COSTS/KM S AVG. TOTAL COSTS/KM S
Pierre Rizzo is considering purchasing a new car. The price of the car is $60000, and Pierre hopes to keep it 4 years and then sell it for $19000. Based on past experience, Pierre drives about 12,000 km per year and lives in a downtown apartment where they must pay a $63 per month parking fee. Pierre has budgeted the following automobile expense items for the next 4 years: Expense Gasoline(13.7L Per 100KM)($1.71 Per Liter) Licence/Registration Insurance Maintenance Tires ($1407 per set that last 42000KM) Parking (48 Months) Interest Depreciation (STRAIGHT LINE) Cost Fixed/Variable Variable $483 Fixed $3309 Fixed $960 Variable Variable $3024 Fixed $3090 Fixed $ Fixed CALCULATE THE FOLLOWING USING THE ABOVE INFORMATION: TOTAL FIXED COSTS (TFC) TOTAL VARIABLE COSTS (TVC) TOTAL COSTS (TC) TOTAL KMS AVG. FIXED COSTS/KM $ AVG. VARIABLE COSTS/KM $ AVG. TOTAL COSTS/KM $ 48000KM
Lulu hypermarket estimates daily demand of 18 kgs for a product. It costs RO 100 to make and receive an order, and it takes 16 workdays to receive it. The annual holding cost is 25 % of purchase price. The price RO 2 per kg. The company is operating 5 days per week, and a total of 210 workdays in one year. What is the minimum annual total holding and ordering cost in RO? Round-up to the nearest integer