Problem 06.010 Annual worth and capital recovery calculationsU.S. Steel is considering a plant expansion to produce austenitic, precipitation hardened, duplex, and martensitic stainless steel roundbars that is expected to cost $17.00 million now and another $10 million 1 year from now. If total operating costs will be $1.800 millionper year starting 1 year from now, and the estimated salvage value of the plant is virtually zero, how much must the company makeannually in years 1 through 10.00 to recover its investment plus a return of 18.00% per year? (Round the final answer to three decimalplaces.)The company must make $million annually in years 1 through 10.00 to recover its investment plus a return of 18.00% per year.

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Answered: Problem 06.010 Annual worth and capital…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Find the conventional payback period for the following project: First Cost $10,000 $500 in Year 1, increasing by $200/year $3,000/year $4,000 Maintenance Income Salvage Useful Life 10 years MARR 10%
An in place machine has an equivalent annual worth of $-100000 for each year of its maximum remaining useful life of two years. A suitable replacement is determined to have equivalent annual worth values of $-175000, $-125000, and $-150000 per year if kept for 1,2, or 3 years, respectively. When should the company replace the machine, if it uses a fixed 3-year planning horizon? Use an interest rate of 17.255609824% per year compounded semiannualy.
You have decided to open a microbrewery selling university-themed beers as one of your product lines. You need to conduct a breakeven analysis of sales and price. You know your fixed costs but based on your marketing plan you are not sure of pricing and sales. Your company MARR is 5%, and fixed costs include an initial capital investment of $250,000 with fixed annual expenses of $100,000. Use a 5-year planning horizon and assume that these expenses will not grow with inflation. a. Draw the cash flow diagram. b. Populate the following table and plot the NPW results in a meaningful plot. (Make sure you label your axis, and your plot should contain three curves.) c. Make a pricing recommendation as a function of sales. You would like to make a minimum of $100,000 for your work on this project.
Your firm is currently paying $3,000 a year to a commercial garbage collection agency to haul waste paper to the city dump. The paper could be sold as waste paper if it were baled and strapped. A paper baler is available at the following conditions: Purchase price = $6,500 Labor to operate baler = $3,500/year Strapping material = $300/year Life of baler = 30 years Salvage value = $500 MARR = 10%/year If it is estimated that 500 bales would be produced per year, what would the selling price per bale to a wastepaper dealer have to be to make this project acceptable? Assume no inflation.
You purchase equipment for $13,000,000 To operate the equipment, you incur expenses of $3,900,000 per year The equipment generates revenue of $8,400,000 per year 5. a) What is the non-discounted (i 0% ) payback period? b) What is the payback period at MARR = 15%? %3D %3D
Apricot Computers is considering replacing its material handling system and either purchasing or leasing a new system. The old system has an annual operating and maintenance cost of $31,000, a remaining life of 8 years, and an estimated salvage value of $5,300 at that time. A new system can be purchased for $259,000; it will be worth $24,000 in 8 years; and it will have annual operating and maintenance costs of $16,000/year. If the new system is purchased, the old system can be traded in for $19,000. Leasing a new system will cost $25,000/year, payable at the beginning of the year, plus operating costs of $7,100/year, payable at the end of the year. If the new system is leased, the old system will be sold for $9,000. MARR is 15%. Compare the annual worths of keeping the old system, buying a new system, and leasing a new system based upon a planning horizon of 8 years. Click here to access the TVM Factor Table Calculator For calculation purposes, use 5 decimal places as displayed in the…
Pls in details In the production of a certain product, two operation are available. One will produce 40 units of the finished product per P1,000.00 worth of raw materials and will cost P4.20 per unit of the finished product. The other process will produce 44 units of the finished product per P1,000.00 worth of raw materials and will cost P5.60 per unit of the finished product. What is the break-even point in unit value of the finished product below which the low efficiency process should be used and above which high efficiency should be used?
A man is considering putting up his own enterprise, where an investment of 800,000 will be required and will take 15 years to recoup. He estimates his annual sales at 800,000 along with the following operating costs. Materials =160,000/ yearLabor = 280,000/ yearOverhead = (40,000 + 10% of sales)/ yearSelling Expense = 60,000/ yearThe man will give up his regular job paying 216,000 Php per year and devote all his time to the operation of his business, this will result in decreasing his labor cost by 40,000 per year, material cost by 28,000 per year and overhead cost by 32,000 per year. If the man expects to earn at least 20% of his capital, should he invest? Solve using a) Rate of return method b) annual worth method c)present worth method d)equivalent uniform annual cost method
• Smalltown, PA currently has a $38,000/year contract with a private company to transport students to their school and back. Smalltown can buy a bus for $40,000 that will be adequate for the next 5 years. Operating and maintenance costs are estimated to be $25,000 per year. At the end of 5 years, the bus will have an estimated salvage value of $5,000. Their MARR is 10%/year. а. What is the Excel or closed form equation (along with the value of relevant parameters) to determine this investment's internal rate of return?
A project has an initial cost of $150,000. The annual operating cost is $8000 for the first 10 years and $5000 thereafter. There is a recurring $15000 maintenance cost each 15 years. The equation that represents the capitalized cost of this project at i=10% is: CW(10%) =150,000+8,000(P/A, 10 %, 10)+(5000/0.1) (P/F, 10%, 11 ) + (15000 (A/F, 10%, 15))/0.1 CW(10%) - 150,000+8,000(P/A, 10 %, 10) +(5000/0.1) (P/F, 10%, 10 ) + ( 15000(A/F, 10%, 15))/0.1 O CW(10%) =150,000+8,000(P/A, 10 %, 10) + (5000 / 0.1) ( P/F, 10%, 11) +15000(A/F, 10%, 15) O CW(10%) =150,000+8,000(P/A, 10 %, 10) +(5000/0.1) (P/F, 10% , 9) +(15000(A/F, 10%, 15))/0.1
An appliance manufacturing company intends to produce three models of electric fans. These models are the Stand Fan, Wall Fan, and Ceiling Fan. The table below shows the available information on these three models. Stand Fan P 750.00 P 300.00 How many units of each model should be sold each month to breakeven? Type of Cost Selling Price/Unit Variable Cost/Unit Wall Fan P 500.00 P 250.00 Ceiling Fan P 1,000.00 P 500.00 What are the breakeven sales each month?
QUESTION 8 For th below two machines and based on AW analysis which machine we should select? MARR=10% Machine A Machine B First cost, $ Annual cost, $/year Salvage value, $ Life, years 3 Answer the below question: B-the AW for machine B= 26,612 12,417 4,135 infinite 140,454 7,170

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