Omega Racing and Motor Corporation wishes to evaluate two alternative CNC machines for NHRA engine building. The estimated cash flows are shown in Table below. Use the Annual Worth (AW) method at interest 10% per year to select the better alternative Performance Annual Machine Machine R S First cost, $ 250,000 370,000
Omega Racing and Motor Corporation wishes to evaluate two alternative CNC machines for NHRA engine building. The estimated cash flows are shown in Table below. Use the Annual Worth (AW) method at interest 10% per year to select the better alternative Performance Annual Machine Machine R S First cost, $ 250,000 370,000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
7

Transcribed Image Text:Omega Racing and Performance
Motor Corporation wishes to
evaluate two alternative CNC
machines for NHRA engine
building. The estimated cash flows
are shown in Table below. Use the
Annual Worth (AW) method at
interest 10% per year to select the
better alternative
Annual
operating - 40,000 - 50,000
cost, $
Salvage
value, $
10%
n
1
2
3
4
5
6
First
cost, $ 250,000 370,000
7
7
8
9
10
Life,
years
1.1000
1.2100
1.3310
1.4641
1.6105
1.7716
1.9487
2.1436
2.3579
2.5937
Single Payments
Compound Present Sinking Compound
Amount
F/P
Worth Fund
P/F
A/F
05091
1.00000
0.8264 0.47619
0.7513
0.6830
Machine Machine
R
S
0.6209
0.5645
0.5132
0.4665
TABLE 15 Discrete Cash Flow: Compound Interest Factors
Uniform Series Payments
Present
Capital
Amount Recovery Worth
F/A
A/P
P/A
0.4241
20,000 30,000
0.3855
0.30211
0.21547
0.16380
0.12961
3
0.10541
0.08744
0.07364
0.06275
1.0000
2.1000
3.3100
4.6410
6.1051
7.7156
9.4872
11.4355
13.5795
15.9374
1.10000
057615
0.40211
0.31547
0.26380
0.22961
0.20541
0.18744
0.17364
0.16275
0.9091
1.7356
2.4809
3.1699
3.7908
4.3553
4.8684
5
5.3349
5.7590
6.1446
Arithmetic Gradients
Gradient
Present Worth
P/G
08264
2.3291
4.3781
6.8618
9.6812
12.7631
16.0287
19.4215
22.8913
10%
Gradient
Uniform Series
A/G
0.4762
0.9366
1.3812
1.8101
2.2236
2.6216
3,0045
3.3724
3.7255
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