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State what is meant by the cash flow approach and
list two of its limitations in a replacement study.
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- A machine purchased 3 years ago for $140,000 is now too slow to satisfy the demand of the customers. It can be upgraded now for $81,000 or sold to a smaller company Internationally for $42000. The upgraded machine will have an annual operating cost of $87,000 per year and a $32,000 salvage value in 3 years. If upgraded, the presently owned machine will be retalned for only 3 more years, then replaced with a machine to be used in the manufacture of several other product lines. The replacement machine, which will serve the company now and for a maximum of 8 years, costs $217,000. Its salvage value will be $52.000 for years 1 through 5: $20,000 after 6 years; and $10,000 thereafter. It will have an estimated operating cost of $45,000 per year. Perform an economic analysis at 14% per year using a specified 3-year planning horizon. a) Determine if the current machine should be replaced now or 3 years from now. b) Once decided, determine the equlvalent AW for the next three years. a) The…An aluminum extrusion plant manufactures a particular product at a variable cost of $0.04 per unit, including material cost. The fixed costs associated with manufacturing the product equal $30,000/year. Determine the break-even value for annual sales if the selling price per unit is (a) $0.40, (b) $0.30, and (c) $0.20.As a project engineer, you received the AW analysis below from the finance department. It is for a new piece of equipment you ordered some months ago. You were told the interest rate used was 10% per year, but no first cost or projected salvage value was provided and you want to know them. Determine the values of P and S using the AW values for the year 3. Note: The AW values are equivalent values through the given year, not costs for the single year. Years Retained AW of First Cost, $ AW of Operating Cost, $ per Year AW of Salvage Value, $ 1 -51,700 -15,000 35,000 234 -27,091 -17,000 13,810 -18,899 -19,000 6,648 -14,827 -21,000 4,309 5 -12,398 -23,000 2,457 The value of P is $ 25,149.07 and the value of S is $ 8,853.89 Х
- A construction company is evaluating the purchase of a new concrete mixer with hydraulic hopper and automatic controller. The mixer will have a first cost of BD 12,000, a life of 9 years, and no salvage value. It will require 2 operators at a cost of BD 4.500 per hour each. A total of one cubic meter of concrete can be poured each hour by the mixer. Alternatively, if human labor is used, 5 workers, each earning BD 4 per hour, are required to one cubic meter per hour. The estimated cost of the material is BD 21 per cubic meter and the MARR is 7% per year (clearly show the S.N., numeric answer, and final decision). a) Determine the minimum cubic meters per year to justify the purchase of the automatic mixer. b) The company expects to produce 140 cubic meters per year, which option should they select? Why?A new antitheft system incorporating MEMS technology is being separately evaluated economically by three engineers at Dragon Technologies. The first cost of the equipment will be $90,000, and the life is estimated at 6 years with a salvage value of $9000. The engineers made different estimates of the net savings that the equipment might generate. Jacob made an estimate of $9,000 per year. Susan states that this is too low and estimates $18,000, while Tyler estimates $21,000 per year before tax. If the MARR is 8% per year, use PW to determine if these different estimates will change the decision to purchase the equipment. The present worth of the pessimistic estimate is $ The present worth of the most likely estimate is $ The present worth of the optimistic estimate is $ The equipment purchase by the pessimistic estimate is not justified The equipment purchase by the most likely estimate is not justified The equipment purchase by the optimistic estimate is justifiedPlease correct Solution with Explanation and do not give image format
- complete solution, thank youA machine purchased 3 years ago for $140,000 is now too slow to satisfy the demand of the customers. It can be upgraded now for $88,000 or sold to a smaller company internationally for $50,000. The upgraded machine will have an annual operating cost of $88,000 per year and a $24,000 salvage value in 3 years. If upgraded, the presently owned machine will be retained for only 3 more years, then replaced with a machine to be used in the manufacture of several other product lines. The replacement machine, which will serve the company now and for a maximum of 8 years, costs $223,000. Its salvage value will be $56,000 for years 1 through 5: $20,000 after 6 years; and $10,000 thereafter. It will have an estimated operating cost of $45,000 per year. Perform an economic analysis at 11% per year using a specified 3-year planning horizon. a) Determine if the current machine should be replaced now or 3 years from now. b) Once decided, determine the equivalent AW for the next three years. a) The…A material handling system was purchased 3 years ago for $128,355. Two years ago it required substantial upgrading at a cost of $17,158. It once again is requiring an upgrading cost of $27,127. Alternately, a new system can be purchased today at a cost of $195,603, with a salvage value of $18,627. The existing machine could be sold today for $52,114. In an economic replacement analysis, what first cost should be assigned to the existing system? Enter your answer as follow: 123456.78
