The engineer of problem 4 now wants to consider an aluminum tank as well as the steel and fiberglass tank. The steel tank costs $226,000 and is expected to last 15 years. The aluminum tank is expected to last 25 years. The fiberglass tank costs $31 and is mosted to last oors Nong of the tanks
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- A large city in the mid-West needs to acquire a street-cleaning machine to keep its roads looking nice year-round. A used cleaning vehicle will cost $85,000 and have a $20,000 market (salvage) value at the end of its five-year life. A new system with advanced features will cost $150,000 and have a $40,000 market value at the end of its five-year life. The new system is expected to reduce labor hours compared with the used system. Current street-cleaning activity requires the used system to operate 8 hours per day for 20 days per month. Labor costs $50 per hour (including fringe benefits), and MARR is 12% per year.The best estimate for the reduction of labor hours for the new system is 17% (compared with the used system). Investigate how sensitive the decision is to (a) changes in the MARR, (b) changes in the market value of the new system, and (c) the productivity improvement of the new system. Graph your results. Hint: Think incrementally!Mr. Garcia sold his machine for P20,000 after using it for 6 years. He bought a new machine worth 75,000 with an expected life of 12 years and a salvage value of 2,000. The operating cost is P5,500 per year. The old machine which he bought for P50,000 when new will be useful for 10 years and a junk value of 1,000 but because of appropriate maintenance, it will be useful for another 5 years, no salvage value, with an annual operating cost of twice the new one. If money is worth 12%, was the engineer justified in selling the old machine? Use the ROR method. Show complete solution. Thank youA CNC mill was purchased 4 years ago for $60,000. Even though it is still a productive machine, a better machine is now on the market that can be bought for $80,000. The new machine will increase the benefit by reducing the annual operating costs. Operating cost and book values are shown below for both machines. (MARR=15%) Obtain the EAC of capital cost and EAC of operating cost for both defender and challenger over the years and draw the curves in Excel including the EAC of total costs. Obtain the economic life associated with the minimum EAC of total costs for both defender and challenger Is it worth replacing the machine if the machine is required only for the next 4 years? Defender Challenger Year Op. Cost ($) Book Value ($) Op. Cost ($) Book Value ($) 32,000 80,000 4200 24,000 700 68,000 4500 15,000 1100 61,000 3 4900 7,500 1500 56,000 4 5200 2,500 1900 52,000 5 2300 40,000 6 2700 20,000
- Problem 05.031 Future Worth Analysis A small strip-mining coal company is trying to decide whether it should purchase or lease a new clamshell. If purchased, the "shell" will cost $137,500 and is expected to have a $42,500 salvage value after 6 years. Alternatively, the company can lease a clamshell for only $13,000 per year, but the lease payment will have to be made at the beginning of each year. If the clamshell is purchased, it will be leased to other strip-mining companies whenever possible, an activity that is expected to yield revenues of $9,000 per year. If the company's MARR is 11% per year, should the clamshell be purchased or leased on the basis of a future worth analysis? Assume the annual M&O cost is the same for both options. The future worth when purchased is $ The future worth when leased is $ The clamshell should b✓ (Click to select) leased purchased16. The investment cost of a new equipment is P 50,000 and this equipment will have a market value of P 15,000 at the end of five years. What is the present worth of this market value if the company's MARR is 18 % per year? 17. The initial cost of the new pump system is P 3,500 and has a salvage value of P 500 and costs P 1.50 per hour to operate. The system has an estimated service life of 10 years and operate 800 hours per year. Assume that the company has a MARR of 12% for this project. Is the project a good investment using the approximate present worth of the pump system over the first 10 years of operation?An engineer calculated the AW values shown for retaining a presently owned machine additional years. A challenger has an ESL of 4 years with AW = $-60,000 per year. Assuming all future costs remain the same, when should the company replace the defender? The MARR is 12% per year. Assume used machines like the one presently owned will always be available. AW of Defender, 24 -77,000 -63,000 Years Retained 1 12 -58,000 -64,000 -70,000 13 4 a) at year 5 b) at vear 2 always be available. AW of Defender, 2$ |-77,000 -63,000 -58,000 -64,000 -70,000 Years Retained 3 4 15 O a) at year 5 b) at year 2 c) at year 1 d) at year 4 e) at year 3
- Whales Inc. just invested in revolutionary electrical shock technology that is guaranteed to exterminate any flying insect. The equipment cost $16,250 and has a four-year usable life. The equipment will generate $6,500 in revenue each year. The cost of operating the machine is projected to be $500 the first year and $250 per year after that. When the equipment is disposed of, it is estimated to be worth $800. The company set the MARR at 8%. Note: Round final answer in two decimal places and show complete solution a. The Net Future Worth of this investment = $ Blank 1 b. Is this purchase a wise investment (type only Yes or No) = Blank 2A California utility firm is considering building a 50-megawatt geothermalplant that generates electricity from naturally occurring underground heal. The binary geothermal system will cost $85 million to build and $6 million (including any income-tax effect) to operate per year. (Unlike a conventional fossil fuel plant, this system will require virtually no fuel costs.) The geothermal plant is to last 25 years. At the end of that time, the expected salvage value will be about the same as the cost to remove the plant. The plant will be in operation for 70% (the plant-utilization factor) of the year (or 70% of 8,760 hours per year). If the firm's MARR is 14% per year, determine the cost of generating electricity per kilowatt-hour.Steve Company is considering replacing one of its machines. The available new model has a cost of $220,000, a 16-year life, and an AOC of $2,000. The machine must also be serviced every 4 years at a cost of $10,000. The machine can be salvaged at $45, 000. The MARR is 12% How much annual net income must be realized from the machine to recover the capital investment?
- In a replacement analysis for a vacuum seal on a spacecraft, the following data are known about the challenger: the initial investment is $12,000, there is no annual maintenance cost for the first three years, however, it will be $2000 in each of years four and five, and then $4500 in the sixth year and increasing by $2500 each year thereafter. The salvage value is $0 at all times, and MARR is 12% per year. What is the economic life of this challenger? Present your solution in table form as follows: Show complete calculations for EUAC. EOY MVK loss in MV Cost of Annual Total Cost EUAC During year k Сaptal expenses through year kAnew forklift truck will require an investment of $30,000 and is expected to have end-of-year market values and annual expenses as shown in the Table below. If MARR is 10% per year, find the Economic Service Life of the truck. End of year 1 2 3 4 5 Market Value at end of year $22,500 $16,875 $12,750 $9,750 $7,125 Annual Expenses during year $3,000 $4,500 $7,000 $10,000 $13,000An engineer calculated the AW values shown for retaining a presently owned machine additional years. A challenger has an ESL of 4 years with AW = $-60,000 per year. Assuming all future costs remain the same, when should the company replace the defender? The MARR is 12% per year. Assume used machines like the one presently owned will always be available. AW of Defender, 2$ |-77,000 |-63,000 |-58,000 -64,000 -70,000 Years Retained 1 2 3 4 O a) at year 5 O b) at year 4 c) at year 1 d) at year 3