Required information A remotely located air sampling station can be powered by solar cells or by running an above ground electric line to the site and using conventional power. Solar cells will cost $16,000 to install and will have a useful life of 5 years with no salvage value. Annual costs for inspection, cleaning, and other maintenance issues are expected to be $2,500. A new power line will cost $22,500 to install, with power costs expected to be $1,000 per year. Since the air sampling project will end in 5 years, the salvage value of the line is considered to be zero. NOTE: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. At an interest rate of 10% per year and using an AW analysis, which alternative should be selected? The annual worth of installing solar cells is $- 25477, and the annual worth of installing a new power line is $- 26291 The alternative to be selected is installing solar cells ✔

Required information A remotely located air sampling station can be powered by solar cells or by running an above ground electric line to the site and using conventional power. Solar cells will cost $16,000 to install and will have a useful life of 5 years with no salvage value. Annual costs for inspection, cleaning, and other maintenance issues are expected to be $2,500. A new power line will cost $22,500 to install, with power costs expected to be $1,000 per year. Since the air sampling project will end in 5 years, the salvage value of the line is considered to be zero. NOTE: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. At an interest rate of 10% per year and using an AW analysis, which alternative should be selected? The annual worth of installing solar cells is $- 25477, and the annual worth of installing a new power line is $- 26291 The alternative to be selected is installing solar cells ✔

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Ivanhoe Company has the following information available for September 2022. Unit selling price of…

A: Let me state the given data, Unit selling price = $ 540Unit variable cost= $ 378Total fixed cost= $…

Q: The initial investment costs and the "annual revenues less expenses" of three investment…

A: business and for engineering economics in both industrial engineering and civil engineering…

Q: A new Wave soldering machine is expected to save Fast Circuit Boards 11,500 per year through a…

A: Savings per year = $11500Expected life = 8 years Discount rate = 10%= 0.10Salvage value = 0

Q: I Will 2nd time upload this question not a proper way this Answer ......... Please provide steps by…

A: Step 1:Consider the above given that: - From solar cells: -Initial cost = $7,500Use full life n = 4…

Q: 1. The example in the previous chapter, National Homebuilders, Inc. evaluated cut-and-finish…

A: The objective of this question is to demonstrate the equivalence of Present Worth (PW) over three…

Q: None

A: Step 1: Calculate the Future Worth of Initial CostFor each method, the initial cost will grow based…

Q: You have an asset with a cost of investment (I) of $10,000 with a useful life (N) of 5 years, and a…

A: Given Initial investment I=$10,000 Salvage value (S)=$2000 Life of asset (N)=5 years Required:…

Q: For some years, Mel has contracted with several major pizza retailers for home delivery services. He…

A: Given, Two Delivery Services : Current Van and New VanMARR : 12% Current Van : Purchased 10 years…

Q: ! Required information An electric switch manufacturing company is trying to decide between three…

A: The Annual Worth calculation method is usually used for comparing alternatives. This method is also…

Q: ngineer analyzed four Independent alternatives by the present worth method. On the basis of her…

A: Time value of money In engineering economics, we come across many questions while taking decisions…

Q: BC Junction purchased some embroidering equipment for their Denver facility 3 years ago for $15,000.…

A: MACRS (Modified Accelerated Cost Recovery System) is a method of depreciation used for tax purposes…

Q: An oil company is planning to install a new 80 mm pipeline to connect storage tanks to a processing…

A: Given:Initial cost: RM15,000annual pump operation hours: 450 hourspump cost per hours: RM2.50annual…

Q: A firm is considering the “make vs. buy” question for a subcomponent. If the part is made in-house,…

A: The present worth of an annuity can be calculated by using the following formula: Where, A is…

Q: Machine D E First cost, $ −62,000 −77,000 AOC, $ per year −15,000 −21,000 Salvage value, $…

A: To select between two metal-constricting machines using future worth (FW) analysis, we need to…

Q: The Briggs and Stratton Commercial Division designs and manufacturers small engines for golf turf…

A: The company will be indifferent between the Pull system and the Push system if the Present Worth…

Q: do fast i will 10 upvotes.

A: Sure, let's break down the problem step by step: 1. **Given Parameters**: We are provided with…

Q: Problem 06.004 Annual Worth and Capital Recovery Calculations A delivery car had a first cost of…

A: Annual Worth analysis: The annual worth (AW) analysis is preferably used to compare alternate…

Q: George has just finished the cost analysis of a brass pump with and without an interior coating. The…

A: Here, it is given that George made an analysis of the use of interior coating in. Brass pump as…

Q: Mowbot Company is evaluating several alternatives for its next new product. Cost and revenue…

A: To determine which alternative Mowbot Company should pursue, we will use Incremental Present Worth…

Q: Transformers for underground works were planned to be provided. Type A has an initial cost of…

Q: Please provide steps by step answer with proper calculation and explanation with final answer.....

A: Solution is in answer, feel free to ask for clarifications if needed.

Question

Required information
A remotely located air sampling station can be powered by solar cells or by running an above ground electric line to the
site and using conventional power. Solar cells will cost $16,000 to install and will have a useful life of 5 years with no
salvage value. Annual costs for inspection, cleaning, and other maintenance issues are expected to be $2,500. A new
power line will cost $22,500 to install, with power costs expected to be $1,000 per year. Since the air sampling project will
end in 5 years, the salvage value of the line is considered to be zero.
NOTE: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part.
At an interest rate of 10% per year and using an AW analysis, which alternative should be selected?
The annual worth of installing solar cells is $- 25477
The alternative to be selected is installing solar cells
and the annual worth of installing a new power line is $- 26291 Ⓡ

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Define the term annual worth

VIEW

Step 2: Calculate the annual worth of installing solar cells

VIEW

Step 3: Calculate the annual worth of installing a new power line

VIEW

Step 4: Determine the best alternative

VIEW

Solution

VIEW

Step by step

Solved in 5 steps with 11 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Car A costs $800 more than Car B, but it consumes 0.035 gallons/mile versus 0.06 gallons/mile for Car B. Both vehicles last 10 years and B's salvage value is $175 smaller than A's. Fuel costs $2.30/gallon. Other things being equal, beyond how many miles of use per year (x) does A become preferable to B?
Don't use Excel and pen or paper
I need help only with the second part of inputting this data into excel calculating the Annual Worth for both options. Then using Goal Seek to find out the new salvage value that will equal AW equations, thank you.
5. The physical life is always greater than all the other "life" factors under replacement analysis. 6. If breakeven analysis is conducted with PW analysis for different MEAS, it doesn't guarantee that the fastest alternative to reach its breakeven point has also the highest equivalent worth.
5.24 You and your partner have become very interested in cross-country motorcycle racing and wish to purchase entry-level equipment. You have identified two alternative sets of equipment and gear. Package K has a first cost of $160,000, an operating cost of $7000 per quarter, and a salvage value of $40,000 after its 2-year life. Package L has a first cost of $210,000 with a lower operating cost of $5000 per quarter, and an estimated $26,000 salvage value after its 4-year life. Which package offers the lower present worth analysis at an interest rate of 8% per year, compounded quarterly?
There are two alternative machines for a manufacturing process. Both machines have the same output rate, but they differ in costs. Machine A costs $20,000 to set up and $8,000 per year to operate. It must be completely replaced every 3 years, and it has no salvage value. Machine B costs $50,000 to set up and $2,160 per year to operate. It should last for 5 years and has no salvage value. The costs of two machines are shown below. 0 1 2 3 4 5 Machine A 20,000 8,000 8,000 8,000 Machine B 50,000 2,160 2,160 2,160 2,160 2,160 Assuming the cost of capital is 10%,1. find the equivalent annual cost of Machine A in Box 1. Round it to a whole dollar, and no comma or the dollar sign.2. find the EAC of Machine B in Box 2. The same format as box 1.3. Based on the equivalent annual cost method, type in Box 3 which machine do you recommend, Machine A or Machine B. Question 20 options: Blank # 1 Blank # 2 Blank #…
Nissan is advertising a 24-month lease on the all-electric Leaf for $190 payable at the beginning of each month. The lease requires a $2000 down payment plus the first months payment on signing. No security deposit is required. The lessee pays for maintenance, excess wear and tear, and $0.18 per mile over 12,000 miles per year. Lease end purchase option is $17500 and lease payments total $4560. A disposition fee of $350 is due at the end of the lease period. Assuming an interest rate of 6% compounded monthly, what is the total cost of leasing if you put 40,000 miles at the end of lease?
If the MARR=10%, compute the value of X that makes the alternatives equally desirable. Do not use spreadsheets. Alternatives Machine A Machine B First cost $12,000 $20,000 Annual Operating cost $1,400/year X Salvage value $2,000 $3,000 Life 4 years 8 years
Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for $800,000, $350,000 of which is borrowed at 11% for 5 years, and will have a salvage value of $150,000 after 8 years. Its use will create an opportunity to increase sales by $650,000 per year and will have operating expenses of $250,000 per year. Corporate income taxes are 40%. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR, if the chamber is kept for 8 years. After-tax MARR is 10%. Use 7 years class depreciation for MARCS
Required information PEMEX, Mexico's petroleum corporation, has an estimated budget for oil and gas exploration that includes equipment for three offshore platforms as shown. Use PW analysis to select the best alternative at a MARR of 16% per year. Platform First cost, $ million Y Z -300 -450 -510 M&O, $ million per year -320 -290 -230 Salvage value, $ million 75 50 90 Estimated life, years 20 20 20 Select platform X, Y, or Z using tabulated factors. The present worth of platform X is $- 2298.4 worth of platform Z is $- 1944.14 million, the present worth of platform Y is $- 2262.15 million, and the present million. The platform selected based on the present worth is platform Z
! Required information An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $40,000, an annual operating cost (AOC) of $12,000, and a service life of 2 years. Method B will cost $70,000 to buy and will have an AOC of $6,000 over its 4-year service life. Method C costs $125,000 initially with an AOC of $3,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 7% of its first cost. Perform a present worth analysis to select the method at /= 12% per year. The present worth of method A is $ The present worth of method B is $ The present worth of method C is $ ✓is selected. Method C
Wall’s Pharmacy will have to sell a new product that has an estimated revenue of $5,100 per month and costs of $1,000 per month with an initial purchase of $28,000. How long will Wall's Pharmacy have to sell a new product if the MARR is 3% per month? Wall's Pharmacy will have to sell a new product for __ months.