EXAMPLE 5.4furnace. It has received tenders from three different original manufacturers ofannealing furnace. The details are as follows.M/S Krishna Castings Ltd. is planning to replace its annealingManufacturer13Initial cost (Rs.)80,00,00070,00,00090,00,000Life (years)Annual operation andmaintenance cost (Rs.)Salvage value after12 years1212128,00,0009,00,0008,50,0005,00,0004,00,0007,00,000Which is the best alternative based on future worth method at i = 20%?

Future value is the value of an asset at a specific date. It measures the nominal future sum of…

EXAMPLE 5.4 M/S Krishna Castings Ltd. is planning to replace its annealing furnace. It has received tenders from three different original manufacturers of annealing furnace. The details are as follows. Manufacturer 1 2 3 Initial cost (Rs.) 80,00,000 12 70,00,000 12 90,00,000 12 Life (years) Annual operation and maintenance cost (Rs.) Salvage value after 12 years 8,00,000 9,00,000 8,50,000 5,00,000 4,00,000 7,00,000 Which is the best alternative based on future worth method at i: 20%? %3D

EXAMPLE 5.4 M/S Krishna Castings Ltd. is planning to replace its annealing furnace. It has received tenders from three different original manufacturers of annealing furnace. The details are as follows. Manufacturer 1 2 3 Initial cost (Rs.) 80,00,000 12 70,00,000 12 90,00,000 12 Life (years) Annual operation and maintenance cost (Rs.) Salvage value after 12 years 8,00,000 9,00,000 8,50,000 5,00,000 4,00,000 7,00,000 Which is the best alternative based on future worth method at i: 20%? %3D

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

EXAMPLE 5.4
furnace. It has received tenders from three different original manufacturers of
annealing furnace. The details are as follows.
M/S Krishna Castings Ltd. is planning to replace its annealing
Manufacturer
1
3
Initial cost (Rs.)
80,00,000
70,00,000
90,00,000
Life (years)
Annual operation and
maintenance cost (Rs.)
Salvage value after
12 years
12
12
12
8,00,000
9,00,000
8,50,000
5,00,000
4,00,000
7,00,000
Which is the best alternative based on future worth method at i = 20%?

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