Given two machines.Machine AMachine BFirst costP9,000P16.000Salvage value3.000Annual operation4,0003,400Annual maintenance1.5001.300Taxes and insurance4%4%Life years1015Money is worth at least 16%.Determine the following:Machine A: Total Annual Cost - P 5860.00Machine B: Total Annual Cost P 5340.00Annual Savings-P 520.00Rate of return on additional investment - 7.43

To find: Total annual cost of machine A: Machine A: Annual operation + Annual of maintaince +…

Answered: Given two machines, Machine A Machine B…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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8- The life of a project is 10 years. An equipment is needed for this project. Two alternatives are available. Equipment A has an initial cost of $5000.00, an annual maintenance cost of $300.00, and a salvage value of $800.00 after 5 years. Equipment B has an initial cost of $7000.00, an annual maintenance cost of $400.00, lasts for 10 years and has no salvage value. If the interest rate is 6%: a) Equipment A should be purchased. b) Equipment B should be purchased. c) No equipment should be purchased. d) There is no difference in choosing between A or B.
The General Hospital is evaluating new office equipment offered by four companies. The useful life of the equipment is 5 years. First cost Maintenance and operating cost (annual) Annual benefit Salvage value Company A Company B Company C Company D $15,000 $18,000 $25,000 $20,000 1,600 1,100 30 55 20 40 7500 3,000 9,000 3,500 400 13,000 6,000 The internal rate of return for Company A is close to (%) 900 11,000 4,500
1. The maintenance cost for a certain machine is $1,000 per year for the first 5 years and $2,000 per year for the next 5 years. At an interest rate (compounded) of 10% per year, the present worth of the maintenance is closest to: A. Less than $7,000 B. $7,450 C. $8,500 D. More than $9,000
You plan to retire in 15 years. After retirement you will need $20,000 per yearfor 20 years. If interest remains at 8% compounded annually, how much shouldyou deposit each year until retirement? (Note that you will make a total of 15 endof-year deposits, and your first withdrawal will be made at the end of 16th year.)(a) $13,091 (b) $7,811(c) $6,993 (d) $7,232
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.
Problem 3. Calculate the annual worth in years 1 through 10 of the following series of incomes and expenses, if the interest rate is 10% per year. Year 0 1-6 7-10 Income, S/Year 10,000 800 900 Expense, S/Year 2000 200 300
A cutting-edge product of Continental Fan had the following net cash flow series during its first 5-year period on the market. Find all rate of return values between 0% and 100%. (Round the final answer to three decimal places.) Year 0 1 2 3 45 5 The rate of return is %. Net Cash Flow, $ -54,000 37,000 29,000 10,000 -5,000 13,000
QZY, Inc. is evaluating new widget machines offered by three companies. The chosen machine will be used for 3 years. a) Construct a choice table for interest rates from 0% to 100%. B) MARR = 15%. From which company if any should you buy the widget machine? Use rate of return analysis. A B C First cost $15,000 $25,000 $20,000 Maintenance and operating 1,600 400 900 Annual benefits 8,000 13,000 9,000 Salvage value 3,000 6,000 4,500 a) Construct a choice table for interest rates from 0% to 100% b) MARR = 15%. From which company if any should you buy the widget machine? Use rate of return analysis
1. The following alternatives will be compared based on an 8% interest rate. A 5,000 500 600 5 Machine First cost Annual Maintenance Salvage Value Useful Life B 10,000 200 1,000 12 What is the Equivalent Uniform Annual Cost (EUAC) of machine A? A. 1550 B. 1650 C. 1274 D. 1817
4. An investment generates an annual income of $200,000 with a salvage value of $2,000,000 in 10 years. If the interest rate is 10% per year, how much should one pay for it now?
1. An industrial plant is considering the purchase of a centrifugal pump. Three offers were received and basis of selection have been tabulated as follows: Offer A Offer B Offer C Price of pump P60,000 P96,000 P120,000 Economic life, years 3 5 10 Salvage value at end of economic life 5,000 10,000 8,000 Yearly maintenance cost 10,000 6,000 5,000 . If cost of money is 14%, what offer would you recommend to be purchased? Use the rate of return method, the annual cost method, present worth method and equivalent uniform annual cost method for the evaluation Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

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