Required information The two machines shown are being considered for a chip manufacturing operation. Assume the MARR is a real return of 10% per year and that the inflation rate is 5.5% per year. Machine First Cost, $ M&O, $ per year Salvage Value, $ Life, years A -146,000 -70,000 40,000 5 B -800,000 -5,000 200,000 00 hich machine should be selected on the basis of an annual worth analysis if the estimates are in future dollars? What is the annual rth of the selected alternative?

Required information The two machines shown are being considered for a chip manufacturing operation. Assume the MARR is a real return of 10% per year and that the inflation rate is 5.5% per year. Machine First Cost, $ M&O, $ per year Salvage Value, $ Life, years A -146,000 -70,000 40,000 5 B -800,000 -5,000 200,000 00 hich machine should be selected on the basis of an annual worth analysis if the estimates are in future dollars? What is the annual rth of the selected alternative?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Compare the alternatives below on the basis of their capitalized costs with adjustments made for inflation. Use i=9% per year and f= 2.6% per year. Alternative X Y -17,500,000 -25,000 105,000 -12,000,000 -10,000 82,000 10 First cost, $ AOC, $ per year Salvage value, $ Life, years 00 The capitalized cost for alternative X is $-17711255.7039 O The capitalized cost for alternative Y is $ Select alternative
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Fink Co. is interested in purchasing a new business vehicle. The vehicle costs $50,000 and will generate constant-dollar delivery revenue of $20,000 (year O dollars) for each of the next 6 years. At the end of the 6 years, the vehicle will have a salvage value of $5,000. The tax rate is 21%, and annual inflation is 3%. Assuming that the vehicle is depreciated using MACRS (5-year property class) and that Fink Co. uses an after-tax real interest MARR of 8%, compute the PW, and determine whether Fink Co. should purchase the new business vehicle. Click here to access the TVM Factor Table calculator. Click here to access the MACRS-GDS Property Classes. Click here to access the MACRS-GDS percentages page. Click here to access the MACRS-GDS percentages for 27.5-year residential rental property. LA
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3 eBook Hint Print References Problem 14.030: Compare alternatives by calculating their capitalized cost Compare the alternatives below on the basis of their capitalized costs with adjustments made for inflation. Use / -9% per year and f= 3.5% per year. Alternative First cost, $ AOC. $ per year Salvage value, $ Life, years X -15,500,000 -25,000 105,000 00 The capitalized cost for alternative X is $[ The capitalized cost for alternative Y is $[ Select alternative X Y -12,500,000 -10,000 82,000 10
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