Dexcon Technologies, Inc., is evaluating two alternatives to produce its new plastic filament with tribological (i.e., low friction)properties for creating custom bearings for 3-D printers. The estimates associated with each alternative are shown below. Using aMARR of 15.00% per year, which alternative has the lower present worth? (Include a minus sign if necessary.)MethodFirst CostM&O Cost, per YearSalvage ValueLifeDDM$-160000$-60000$20002 yearsThe present worth for the DDM method is $The present worth for the LS method is $The LSmethod is selected.LS$-340000$-35000$270004 years

Present worth, also known as present value, is the current monetary value of future cash flows or…

Answered: Dexcon Technologies, Inc., is…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A company with a MARR of 10% must install one of two production machines. The economic parameters of each machine are as follows: Machine Initial cost (5) Service life (years) Salvage value end of life (S) $15,000 4 years $22,000 6 years 52,000 $1,000 The Future worth (FW) for the machine Y over the 12 years analysis period is:
What is the present worth equivalent of the machine considered to be the most preferred choice? (i=10%) show detailed solution
Subject : Economy and Engineering Management
onsider the following financial informationabout a retooling project at a computer manufacturing company:• The project costs $2.5 million and has a five-yearservice life.• The retooling project can be classified as sevenyear property under the MACRS rule.• At the end of the fifth year, any assets held for theproject will be sold. The expected salvage valuewill be about 10% of the initial project cost.• The firm will finance 40% of the project moneyfrom an outside financial institution at an interestrate of 10%. The firm is required to repay the loanwith five equal annual payments.• The firm’s incremental (marginal) tax rate on theinvestment is 35%.• The firm’s MARR is 18%.With the preceding financial information,(a) Determine the after-tax cash flows.(b) Compute the annual equivalent worth for thisproject.
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3. You are confronted with a decision whether to replace an old transit mixer or to purchase a new one of the same model and capacity. The following information is given, namely: Replacement (Brand New) 3,200,000 65,000 300,000 15 year Retention (Refurbished) Initial Cost, P 550,000 Operating Cost, P/year Salvage value Life, year 210,000 30,000 5 Assuming interest rate is 6% per year, would you recommend to retain (with refurbishment) or to totally replace the equipment now? What are the implications of your decision? Explain your answer.
Construct and upload a choice table for the alternatives shown below, as the previous problem. Each alternative has a 20 year useful life and no Salvage value. A В C Initial $55,000 $27,000 $20,000 Investment Annual $5,600 $2,700 $2,200 income 8% 7.75% 9.06%
A construction company is evaluating two similar pieces of equipment for their gravel pit operation. If the company policy is to use a MARR = 12%, determine which alternative is economically the better option. Use the EAC method: Option B $75,000 Item Option A $40,000 Initial Purchase Cost Operating Cost (1st year) $25,000 $15,000 Annual increase in Operating Cost No increase 2%/yr Lifespan Salvage Value @ end-of-life 4 years 6 years $10,000 $7,000 Do this question by hand.
expense of $500. Consider a yearly Two machines are evaluated for a new project, consider a yearly interest rate of 6% and the information described in the following table. Determine EUAC for both alternatives and determine the best option. Purchase cost Salvage value Duration Machine A Machine B $10,000 $15,000 $1,250 $1,950 5 years 10 years 11 13 L
Compare two alternatives, 1 and 2, on the basis of a present worth evaluation using 10% per year and a study period of 8 years. Alternative First Cost Annual Operating Cost Overhaul in Year 4 Salvage Value Life Answer to the nearest whole dollars for currency, and the nearest percentage (no decimals) for interest, and a whole number for the number of years. Do NOT enter commas. DO enter minus signs for negative values. 1) What is the Present Worth of Project 1? $ 1 2 ($13,000) ($49,000) ($6,000) ($5,000) $0 ($3,350) $1,800 $6,800 4 years 8 years
The following three alternatives have been developed and costed to improve the efficiency of aircraft engines. Compare the alternatives using capitalized cost and a MARR of 10% per year compounded annually. Alternative Alternative Alternative G First Cost, $ -1,000,000 -3,000,000 -5,000,000 Net income $ per year 325 000 400,000 600,000 Salvage value, S 50,000 70,000 Life, years 4 8.

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