Please correct answer and don't use hand rating and don't use Ai solution Hydrochloric acid, which fumes at room temperatures, creates a very corrosive workenvironment. A mixing machine working in this environment is deteriorating fast and can beused for only 1 more year, at which time it will be scrapped. It was purchased 3 years ago for $88,000 and its operating cost for the next year is expected to be $57,000. A more corrosion-resistant challenger will cost $226,000 with an operating cost of $52,000 per year. It isexpected to have a $60,000 salvage value after its 10-year ESL. At an interest rate of 15% peryear, what minimum trade-in value will make the challenger economically attractive?

Answered: Hydrochloric acid, which fumes at room…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Hydrochloric acid, which fumes at room temperatures, creates a very corrosive work environment. A mixing machine working in this environment is deteriorating fast and can be used for only 1 more year, at which time it will be scrapped. It was purchased 3 years ago for $88,000 and its operating cost for the next year is expected to be $67,000. A more corrosion-resistant challenger will cost $226,000 with an operating cost of $54,000 per year. It is expected to have a $60,000 salvage value after its 10-year ESL. At an interest rate of 15% per year, what minimum trade-in value will make the challenger economically attractive? On equating the AW values of the defender and the challenger, to calculate the minimum trade-in value of the challenger, the spreadsheet tool that should be used is GOAL SEEK The minimum trade-in value that will make the challenger economically attractive will be $ 74,457
Hydrochloric acid, which fumes at room temperatures, creates a very corrosive work environment. A mixing machine working in this environment is deteriorating fast and can be used for only 1 more year, at which time it will be scrapped. It was purchased 3 years ago for $88, 000 and its operating cost for the next year is expected to be $67,000. A more corrosion-resistant challenger will cost $226,000 with an operating cost of $54,000 per year. It is expected to have a $ 60,000 salvage value after its 10-year ESL. At an interest rate of 15% per year, what minimum trade - in value will make the challenger economically attractive? On equating the AW values of the defender and the challenger, to calculate the minimum trade - in value of the challenger, the spreadsheet tool that should be used is GOAL SEEK. The minimum trade - in value that will make the challenger economically attractive will be $54, 703.96. Give correct answer Hydrochloric acid, which fumes at room temperatures, creates a…
Salim Service company owns several taxis that were purchased four years ago for $27000 each. The current market value is $10000 each. If they are kept for another 6 years, they can be sold for $2000 each. The annual maintenance cost per cab is $900 a year. Salim Service is looking at replacing the cabs with the option to lease new cabs at an annual cost of $9000 per year per cab which includes free maintenance. How much more would it cost them per year to switch to leasing? Assume an interest rate of 9%.
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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 $ .
A machine that cost $120,000 3 years ago can be sold now for $51,500. Its market value is expected to be $40,000 and $20,000 1 year and 2 years from now, respectively. Its operating cost was $18,000 for the first 3 years of its life, but the M&O cost is expected to be $23,000 for the next 2 years. A new improved machine that can be purchased for $135,500 will have an economic life of 5 years, and an operating cost of $9,000 per year, and a salvage value of $32,000 whenever it is replaced. At an interest rate of 10% per year, determine if the presently owned machine should be replaced now, 1 year from now, or 2 years from now. The annual worth of the existing machine one year from now is $- 50500 O. the annual worth of the existing machine two years from now is $- 30,500 . and the annual worth of the new machine is $-112,500 The presently owned machine should be replaced now 13
QUESTION 3 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 $57,000. A more corrosion-resistant challenger will cost $212,000 with an operating cost of $55,000 per year. It is expected to have a $50,000 salvage value after its 10- year ESL. At an interest rate of 11% per year, what minimum replacement value would render the challenger attractive? The Replacement Value, (in $)
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A machine that cost $120,000 3 years ago can be sold now for $52,750. Its market value is expected to be $40,000 and $20,000 1 year and 2 years from now, respectively. Its operating cost was $18,000 for the first 3 years of its life, but the M&O cost is expected to be $23,000 for the next 2 years. A new improved machine that can be purchased for $136,750 will have an economic life of 5 years, and an operating cost of $9,000 per year, and a salvage value of $32,000 whenever it is replaced. At an interest rate of 10% per year, determine if the presently owned machine should be replaced now, 1 year from now, or 2 years from now. The annual worth of the existing machine one year from now is $- now is $- ], and the annual worth of the new machine is $- The presently owned machine should be replaced (Click to select) the annual worth of the existing machine two years from
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A specialty concrete mixer used in construction was purchased for $300,000 7 years ago. Its annual O&M costs are $105,000. At the end of the 8-year planning horizon, the mixer will have a salvage value of $5,000. If the mixer is replaced, a new mixer will require an initial investment of $375,000 and at the end of the 8-year planning horizon, the new mixer will have a salvage value of $45,000. Its annual O&M cost will be only $40,000 due to newer technology. Use an EUAC measure and a MARR of 15% to see if the concrete mixer should be replaced if the old mixer is sold for its market value of $65,000. Solve, a. Use the cash flow approach (insider’s viewpoint approach). b. Use the opportunity cost approach (outsider’s view point approach).
Last year, a decision was made to keep the same equipment in lieu of buying new equipment. The old equipment's trade-in value last year was $4000 and its value this year is $2000. The operating cost was $700 last year. If bought last year, the new equipment would have cost $11K, the salvage value after 8 years would be $2000, and it would have an annual operating cost of $4000. If bought last year, what would have been the EUAC of the new equipment (in dollars) at 17% interest rate per year? (provide your answer in the box as a negative value if you arrive at costs) What would have been the correct decision? (provide your answer and justification in your pdf file submission)

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