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From the data shown, determine the economic service life of the asset.
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- Veritas Inc. has decided to acquire a new Hydraulic Excavator. It has three options. Caterpillar: purchase cost of $354,055 and operating costs of $28,121 per year (paid at the end of each year). John Deere: purchase cost of $288,413 and operating costs of $21,091 per year (paid at the end of each year). Volvo: purchase cost of $323,238 and operating costs of $15,484 per year (paid at the end of each year). Assume that Geek Inc. has a budget of $335,269 and all excavators have a service life of 13 years. Based on the defender-challenger approach and given that the MARR is 10%, compute the incremental Benefit-Cost ratio of choosing the best excavator (note: round your answer to two decimal places; do not include spaces, dollar signs, or commas). Indicate your recommendation as follows: - answer "0" (without the commas) if your recommendation is the Caterpillar; - answer "1" (without the commas) if your recommendation is the John Deere; - write down as your answer the value of the…A machine purchased 3 years ago for $140,000 is now too slow to satisfy the demand of the customers. It can be upgraded now for $81,000 or sold to a smaller company Internationally for $42000. The upgraded machine will have an annual operating cost of $87,000 per year and a $32,000 salvage value in 3 years. If upgraded, the presently owned machine will be retalned for only 3 more years, then replaced with a machine to be used in the manufacture of several other product lines. The replacement machine, which will serve the company now and for a maximum of 8 years, costs $217,000. Its salvage value will be $52.000 for years 1 through 5: $20,000 after 6 years; and $10,000 thereafter. It will have an estimated operating cost of $45,000 per year. Perform an economic analysis at 14% per year using a specified 3-year planning horizon. a) Determine if the current machine should be replaced now or 3 years from now. b) Once decided, determine the equlvalent AW for the next three years. a) The…A company that makes micro motion compact coriolis meters purchased a new packaging system for $600,000. The estimated salvage value was $28,000 after 10 years. Currently the expected remaining life is 7 years with an AOC of $27,000 per year and an estimated salvage value of $40,000. The company is considering early replacement of the system with one that costs $370,000, has a 12-year economic service life, a $22,000 salvage value, and an estimated AOC of $50,000 per year. The MARR for the corporation is 12% per year. (a) Determine the minimum trade-in value necessary now to make the replacement economically advantageous. (b) Write the spreadsheet functions necessary to determine RV using Goal Seek.
- Digital Tech Dynamics purchased a new quality inspection system for $550,000. The estimated salvage value was $50,000 after 10 years. Currently, the expected remaining life is 7 years with an AOC of $45,000 per year and an estimated salvage value of $40,000. The new president has recommended early replacement of the system with one that costs $450,000 and has a 12-year economic service life, a $35,000 salvage value, and an estimated AOC of $50,000 per year. If the MARR for the corporation is 12% per year, use factor-based relations to determine the minimum trade-in value necessary now to make the president's replacement economically advantageous. The minimum trade-in value necessary now to make the president's replacement economically advantageous is $Stahmann Products paid $350,000 for a numerical controller and had it installed at a cost of $50,000. The recovery period was 7 years with an estimated salvage value of 10% of the original purchase price. Stahmann sold the system 4 years after it was purchased for $45,000. State the numerical values for the following: remaining life at sale time, market value at sale time, and book value at sale time if 65% of the basis had been depreciated. The remaining life at sale time is years. The market value at sale time is $ . The book value at sale time if 65% of the basis has been depreciated is $ .A piece of equipment has a first cost of $150,000, a maximum useful life of 7 years, and a market (salvage) value described by the relation S = 120,000 – 17,000k, where k is the number of years since it was purchased. The salvage value cannot go below zero. The AOC series is estimated using AOC = 60,000 + 7,000k. The interest rate is 14% per year. Determine the economic service life and the respective AW. The economic service life is ...... year(s) and the AW value is ........
- DBS Builders Pte Ltd purchased an asphalt paver eight years ago for $280,000. The estimated operation and maintenance (O&M) costs for the next three years are $56,000, $68,000, and $82,000, respectively. The asphalt paver can be sold for $65,000 now, for $57,000 next year, for $45,000 two years from now, and for $28,000 three years from now. 4. The latest asphalt paver in the market costs $290,000 and has an estimated service life of five years. The salvage value is estimated to be $50,000 after five years. The expected annual O&M costs will be $6,000 for the first year and increase by $3,800 per year thereafter. If a before-tax minimum attractive rate of return (MARR) of 12% is estimated, what replacement decision should DBS Builders make?The beautiful expert Hand written solution is not allowed.Part a.) An engineer with Calahan Technologies calculated the AW of cost values shown for a presently owned machine using estimates she obtained from the vendor and company records. A challenger has an economic service life of 7 years with an AW of $-86,000 per year. Assume that all future costs remain as estimated and the challenger's technology will definitely replace that of the defender within 5 years. When should the company purchase the challenger? Retention Period, Years AW of Costs, $ per Year -92,000 2 -81,000 -87,000 4 -89,000 5 -95,000 Part b.) The costs and revenue projections for a new product made on the machine from Part a.) are estimated below. What is the estimated profit at a production rate of 25% above breakeven? Fixed cost = $592,000 per year Production cost per unit = $198 Revenue per unit = $330
- Digital Tech Dynamics purchased a new quality inspection system for $550,000. The estimated salvage value was $50,000 after 10 years. Currently, the expected remaining life is 7 years with an AOC of $67,500 per year and an estimated salvage value of $40,000. The new president has recommended early replacement of the system with one that costs $430,000 and has a 12-year economic service life, a $35,000 salvage value, and an estimated AOC of $50,000 per year. If the MARR for the corporation is 12% per year, use factor-based relations to determine the minimum trade-in value necessary now to make the president's replacement economically advantageous. The minimum trade-in value necessary now to make the president's replacement economically advantageous is $[A machine purchased 3 years ago for $140,000 is now too slow to satisfy the demand of the customers. It can be upgraded now for $88,000 or sold to a smaller company internationally for $50,000. The upgraded machine will have an annual operating cost of $88,000 per year and a $24,000 salvage value in 3 years. If upgraded, the presently owned machine will be retained for only 3 more years, then replaced with a machine to be used in the manufacture of several other product lines. The replacement machine, which will serve the company now and for a maximum of 8 years, costs $223,000. Its salvage value will be $56,000 for years 1 through 5: $20,000 after 6 years; and $10,000 thereafter. It will have an estimated operating cost of $45,000 per year. Perform an economic analysis at 11% per year using a specified 3-year planning horizon. a) Determine if the current machine should be replaced now or 3 years from now. b) Once decided, determine the equivalent AW for the next three years. a) The…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 $ .