Q#1) Select the most economical among the following mutually exclusive alternatives using PW and AW methods of analysis at interest rate of 10% per year: First cost (5) Annual Operating Cost ($/year) Major repair ($) Life (years) Salvage ($) Machine A 20,000 5,000 for the first year and increases by 1,000 each year none 10 2,000 Machine B 50,000 2,000 per year up to year 10 and 5,000 per year thereafter 5,000 every 5 years including at year 40 40 5,000 Q#2) Find the Rate of Return for machines A and B in question #1 if the annual revenues for each machine is estimated at $20,000 per year.

Q#1) Select the most economical among the following mutually exclusive alternatives using PW and AW methods of analysis at interest rate of 10% per year: First cost (5) Annual Operating Cost ($/year) Major repair ($) Life (years) Salvage ($) Machine A 20,000 5,000 for the first year and increases by 1,000 each year none 10 2,000 Machine B 50,000 2,000 per year up to year 10 and 5,000 per year thereafter 5,000 every 5 years including at year 40 40 5,000 Q#2) Find the Rate of Return for machines A and B in question #1 if the annual revenues for each machine is estimated at $20,000 per year.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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