Hemisphere Electric may purchase equipment to manufacture a new line of wireless devices for home appliance control. The first cost of the equipment will be $78,000, and the life of the equipment is estimated to be 6 years with a salvage value of $10,000. Different people in marketing have provided revenue estimates that the devices will generate. The estimates range from a low of $10,000 to a high of $20,000, with an average of $16,000 per year. If the MARR is 9% per year, use PW to determine if these different estimates will change the decision to purchase the equipment. The present worth of low estimate range is $ The present worth of average estimate range is $ The present worth of high estimate range is $ The $10,000 revenue estimate does not favor The $16,000 revenue estimate does not favor The $20,000 revenue estimate favors the purchase. the purchase. the purchase.

Hemisphere Electric may purchase equipment to manufacture a new line of wireless devices for home appliance control. The first cost of the equipment will be $78,000, and the life of the equipment is estimated to be 6 years with a salvage value of $10,000. Different people in marketing have provided revenue estimates that the devices will generate. The estimates range from a low of $10,000 to a high of $20,000, with an average of $16,000 per year. If the MARR is 9% per year, use PW to determine if these different estimates will change the decision to purchase the equipment. The present worth of low estimate range is $ The present worth of average estimate range is $ The present worth of high estimate range is $ The $10,000 revenue estimate does not favor The $16,000 revenue estimate does not favor The $20,000 revenue estimate favors the purchase. the purchase. the purchase.

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

100%

Hemisphere Electric may purchase equipment to manufacture a new line of wireless devices for home appliance control. The first cost
of the equipment will be $78,000, and the life of the equipment is estimated to be 6 years with a salvage value of $10,000. Different
people in marketing have provided revenue estimates that the devices will generate. The estimates range from a low of $10,000 to a
high of $20,000, with an average of $16,000 per year. If the MARR is 9% per year, use PW to determine if these different estimates will
change the decision to purchase the equipment.
The present worth of low estimate range is $
The present worth of average estimate range is $
The present worth of high estimate range is $[
The $10,000 revenue estimate does not favor
The $16,000 revenue estimate does not favor
The $20,000 revenue estimate favors
the purchase.
the purchase.
the purchase.

Expert Solution

Step 1

Given:-

First Cost = 78,000

Life = 6 years

Salvage Value = 10,000

Revenue –

Low Estimates = 10,000 per year

Average Estimates = 16,000 per year

High Estimates = 20,000 per year

MARR = 9%

To calculate:-

PW of low=?

PW of average=?

PW of high=?

Please find detailed solution in next step

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