Teduie company bought a new model of motor for its electric power generating plant in 2017. Theuseful life of the motor was 5 years and the investment was $30,000 in 2017's dollars. The followingtable shows the savings obtained through the project in actual dollars and the consumer price indexnumbers for the time period between 2017 and 2022:PriceEnd of YearSavingsIndex20172502018$10,000250$12,100$14,641$19,326.1$23,384.620192752020302.520213632022399.3If the inflation-free interest rate is 15%, determine whether the investment was worthwhile.

Teduie company bought a new model of motor for its electric power generating plant in 2017. The useful life of the motor was 5 years and the investment was $30,000 in 2017's dollars. The following able shows the savings obtained through the project in actual dollars and the consumer price index humbers for the time period between 2017 and 2022: Price End of Year Savings Index 2017 250 $10,000 $12,100 $14,641 $19,326.1 $23,384.6 2018 250 2019 275 2020 302.5 2021 363 2022 399.3

Teduie company bought a new model of motor for its electric power generating plant in 2017. The useful life of the motor was 5 years and the investment was $30,000 in 2017's dollars. The following able shows the savings obtained through the project in actual dollars and the consumer price index humbers for the time period between 2017 and 2022: Price End of Year Savings Index 2017 250 $10,000 $12,100 $14,641 $19,326.1 $23,384.6 2018 250 2019 275 2020 302.5 2021 363 2022 399.3

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You as a businessperson have one million dollars to invest. One option is to invest your money. in a saving account that gives you 8% annual interest rate. But you decide to open a book store instead. You need to rent a place for $7900 per month and hire two workers and pay them each $6000 monthly. The other expenses such as purchases and overhead are $6500 per month. Your store generates $395,000 sales per year. How much is your economic profit? Which business do you choose? explain
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A new machine costs $899,090 and falls in a 29.50% CCA class. The machine will have zero value after 5 years of use but will save $417,680 annually in operating costs before taxes in those five years. Assume a tax rate of 34.17%. Using a required return of 15.11%, what is the equivalent annual cost (EAC) of the machine purchase, considering the annual cash flow, initial purchase, and CCA tax shield? Options $59,682 $61,252 $62,823 $64,393 $65,964
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A 10 HP motor last 5 years ago cost $700. That same motor costs $1000 today. If the CEPCI value today is 570, what was the CEPCI index value 5 years ago?
2. One year ago, a machine was purchased at a cost of $2,000, to be used for 6 years.However, the machine has failed to perform properly and has a cost of $500 per year forrepairs, adjustments, and shutdowns. A new machine is available to accomplish thefunctions desired and has an initial cost of $3,500. Its maintenance costs are expected tobe $50 per year during its service of 5 years. The approximate market value of the presentmachine has been roughly $1,200. If the operating cost (other than maintenance) for bothmachines are equal, show whether it is economical to purchase the new machine. Performa before-tax study, using an interest rate of 12% and assume that the salvage values will benegligible.