Komatsu Cutting Technologies is considering replacing one of its CNC machines with one that is newerand more efficient. The firm purchased the CNC machine 10 years ago at a cost of $150,000. Themachine had an expected economic life of 12 years at the time of purchase and an expected salvagevalue of $12,000 at the end of the 12 years. The original salvage estimate is still good, and the machinehas a remaining useful life of 2 years. The firm can sell this old machine now to another firm in theindustry for $35,000. A new machine can be purchased for $175,000, including installation costs. It hasan estimated useful (economic) life of 8 years. The new machine is expected to reduce the cashoperating expenses by $30,000 per year over its 8-year life, at the end of which the machine isestimated to be worth only $5000. The company has a MARR of 12%. The asset is classified as a Class 43Property with a CCA rate of %30. The firm's marginal tax rate is 40%.Compute the cash flows associated with retaining the old machine in years 1 to 2.

has a remaining useful life of 2 years. The firm can sell this old machine now industry for $35,000. A new machine can be purchased for $175,000, includir an estimated useful (economic) life of 8 years. The new machine is expected operating expenses by $30,000 per year over its 8-year life, at the end of whi estimated to be worth only $5000. The company has a MARR of 12%. The ass Property with a CCA rate of %30. The firm's marginal tax rate is 40%.

has a remaining useful life of 2 years. The firm can sell this old machine now industry for $35,000. A new machine can be purchased for $175,000, includir an estimated useful (economic) life of 8 years. The new machine is expected operating expenses by $30,000 per year over its 8-year life, at the end of whi estimated to be worth only $5000. The company has a MARR of 12%. The ass Property with a CCA rate of %30. The firm's marginal tax rate is 40%.

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

Machines that have the following costs are under consideration for a new manufacturing process. Compute the Equivalent Annual Worth with an interest rate of 8%, compounded semiannually. The machine last 4 years. First cost: $48,000 Semiannual Operating cost: $7.000 Semiannual incomes: $14,000 Salvage value : $10,000 a. EAW=$21.745 b. EAW=$2,957 C. EAW=$175 d. EAW=$1,958
Below are the costs and revenues of 2 alternatives for a machine. When the discount rate is 26.5% per year, determine which alternative is economically viable using the annual value method. 1. Machine 2. Machine Initial investment expense $1,400,000 $1,170,000 Scrap price $280,000 $175,500 First year value of annual operating expense $60,000 $28,000 Annual increase rate of operating expenses %23 %26 Annual revenue $720,000 $630,000 Annual revenue change 8 years fixed, then descending linearly 7 years fixed, then geometricdecreasing Annual reduction rate of revenues or quantity $3,500 -%6 Economic Life 20 years 15 years Below are the costs and revenues of 2 alternatives for a machine. When the discount rate is26.5%per year, determine which alternative is economically viable using the annual value
As a Project Engineering had been tasked to make an analysis and to recommend to yourcompany on the economic justification on option to purchase a new or 3-year old used truck tobe used for the company's project construction activities as well as providing some rentalbusiness for three years. As the truck is not used for the whole time, 5-days a month it is beingrented out. The new truck having better fuel efficiency and lower maintenance cost. Based onyour data gathering, you have this information derived for the analysis.(Refer to attached image) b) Based on Payback Period evaluation, which unit will you recommend to your management to be purchased and why?
A machine costs P150,00O and will have a scrap value of P10000 when retired at the end of 15 years. If money is worth 4%, find the annual investment and the capitalized cost of the machine.
A company is looking to install a new automated system to increase its revenues by $24,000 per year over the next five years. Annual expanses of the system are expected to be $3,400. The system will cost $80,000 and have $5,000 salvage value at the end of the fifth year. If the MARR is 10%, what is the Annual Worth (AW). Select one: O a. $215 O b. $115 O C. $315 O d. $415
10.7 Determine the economic life of an $800 laptop computer. Your personal interest rate is 10% per year. Annual expenses and year-end resale values are expected to be the following: Year 1 Year 2 Year 3 Software upgrades and maintenance $150 $200 $300 Resale value at end of year $600 $450 $200
What is the total lifetime cost of the system given the following information? The initial cost of the system is $4800. The system has annual maintenance costs of $175. On the fourth year, an overhaul cost of $350 is scheduled. The system is expected to last for 5 years. The discount rate is 8%. Answer to the nearest dollar $________.00.
Rerform an EAC analysis and evaluate what decision to make regarding 2 challengers and 1 defender. Elaborate:a) Graphsb) EAC analysisc) Conclude the exercise and make a decision regarding the results Machine N1 (#1 challenger) useful life = 8 years Initial Cost $15,000 MARR 18% Year Operating costs Market value EAC 1 $ 355.00 $ 8,000.00 2 $ 500.00 $ 7,000.00 3 $ 788.00 $ 6,000.00 4 $ 1,000.00 $ 5,000.00 5 $ 1,355.00 $ 4,000.00 6 $ 1,688.00 $ 3,000.00 7 $ 2,012.00 $ 1,000.00 8 $ 2,345.00 $ 0.00
(hand written)please do it in 30 minutes please urgently... I'll give you up thumb
The following tables show the marginal costs of a defender over its remaining four years of service life. If the challenger's minimum EUAC is $29,403, what is the most appropriate replacement decision? Year 1234 Marginal cost $31,053 $26,353 $28,003 $32,803 ○ A. No decision can be made unless additional calculations are made on the challenger B. Replace the defender now OC. No decision can be made unless additional calculations are made on the defender ○ D. Keep the defender for at least one more year
We bought a CNC machine 3 years ago for $100,000 with a salvage value of $20,000 after 8 years. It has an annual operating cost of $30,000. A new machine is available at a price of $120,000, a life of 10 years and a salvage value of $30,000. The annual operating cost for this machine is $15,000. The market value for the CNC machine is $70,000 now. At MARR= 10% per year should we keep the CNC machine or replace it?
A new machine can be purchased for $50,000. Its expected useful ife is seven years, with a salvage value of $5,000. Annual revenues wil be $22,000 per year and annual expenses will be 8,000 per year, over the seven-year study period. If the MARR is 10%, detemine whether the offer should be accepted. Oa Acceptable and its AW $4257 OD. Acceptable, and its AW -$5,067 Oc Not acceptable and its AW $2,345 Od. Not acceptable and ts AW 53,281