The following information is known in a renewal analysis problem: Initial cost: 12 500 TL Annual maintenance cost: None in the first three years, 2 000 TL at the end of the 4th year, 2000 TL at the end of the 5th year, after the 5th year will increase by 2 500 TL per year (4 500 TL at the end of the 6th Year, 7 000 TL at the end of the 7th year, etc.) in any year scrap value is zero. Take the interest rate of 10% and neglect income taxes. Calculate economic life for this candidate equipment.

The following information is known in a renewal analysis problem: Initial cost: 12 500 TL Annual maintenance cost: None in the first three years, 2 000 TL at the end of the 4th year, 2000 TL at the end of the 5th year, after the 5th year will increase by 2 500 TL per year (4 500 TL at the end of the 6th Year, 7 000 TL at the end of the 7th year, etc.) in any year scrap value is zero. Take the interest rate of 10% and neglect income taxes. Calculate economic life for this candidate equipment.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The constant percentage method will be used to depreciation a machine with an initial cost of P 1.2 million pesos and life of 12 years. What must be the minimal salvage value such that it's book value after five years does not fall below P240000
Consider the following 2 alternatives. Alternative A Initial cost: $10,000 Mainteinance anual $6000 Useful life 2 years Residual Value $1000 Alternative B Initial cost $ 12,000 Maintenance annual $ 5000 Useful life 4 years Residual value $ 3000 MARR for both is 8% a) The equivalent Uniform Annual Value for alternative A is $ and the equivalent Uniform Annual Value for alternative B is $
Alternative X has a first cost of $30,000, an operating cost of $9,000 per year, and a $5,000 salvage value after 5 years. Alternative Y will cost $45,000 at nO with an operating cost of $4,000 per year after that and a salvage value of $7,000 after 5 years. At an MARR of 12% per year, what is the present worth far alternative X2 $49,606 $58,777 $59,606 -$32,443
Project XYZ has a first cost of $75,000, operating and maintenance costs of $10,000 during each year of its 10 years life, and a $15,000 salvage value. What is its equivalent uniform annual cost (EUAC) if the interest rate is 10%/year? Most nearly number for answer. O No correct answer 21546 O 21262 21622 26223 22126
Dog Up! Franks is looking at a new sausage system with an installed cost of $685,000. This cost will be depreciated straight-line to zero over the project's 5-year life, at the end of which the sausage system can be scrapped for $91,000. The sausage system will save the firm $195,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $47,000. If the tax rate is 21 percent and the discount rate is 10 percent, what is the NPV of this project? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. NPV
Compare the alternatives C and D on the basis of a present worth analysis using an interest rate of 10% per year and a study period of 10 years. Alternative C First Cost $-40,000 $-11,000 $-24,000 AOC, per Year Annual Increase in Operating Cost, per Year Salvage Value Life, Years $-2,000 $-200 $-500 $6,000 $200 10 The present worth of alternative C is $ and that of alternative D is $ (Click to select) voffers the lower present worth.
An asset that costs $3 million dollars will be depreciated to a zero book value across a 12 year project using the straight-line method. What is the depreciation amount per year?
A machine cost is 3000$ and salvage value 850$, if the rate of interest is 9% and number of years are 5 then what willI be the present worth for fixed output condition? Select one: a. 2448$ b. 2418$ c. 2427$
3. You are confronted with a decision whether to replace an old transit mixer or to purchase a new one of the same model and capacity. The following information is given, namely: Replacement (Brand New) 3,200,000 65,000 300,000 15 year Retention (Refurbished) Initial Cost, P 550,000 Operating Cost, P/year Salvage value Life, year 210,000 30,000 5 Assuming interest rate is 6% per year, would you recommend to retain (with refurbishment) or to totally replace the equipment now? What are the implications of your decision? Explain your answer.
Assume that a company is choosing between two alternatives-lease a piece of equipment for five years or buy a piece of equipment and sell it in five years. The costs associated with the two alternatives are summarized as follows: Lease Buy $ 60,000 $ 6,000 Purchase cost of equipment Annual operating costs Immediate deposit Annual lease payments Salvage value (5 years from now) $ 8,000 Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided. If the company chooses the lease option, it will have to pay an immediate deposit of $25,000 to cover any future damages to the equipment. The deposit is refundable at the end of the lease term. The annual lease payments are made at the end of each year. Based on a net present value analysis with a discount rate of 12%, what is the financial advantage (disadvantage) of buying the equipment rather than leasing it? $ 25,000 $ 18,000
An existing asset that cost $16,000 twoyears ago has a market value of $12,000 today, anexpected salvage value of $2,000 at the end of itsremaining useful life of six more years, and annualoperating costs of $4,000. A new asset under consideration as a replacement has an initial cost of$10,000, an expected salvage value of $4,000 at theend of its economic life of three years, and annualoperating costs of $2,000. It is assumed that thisnew asset could be replaced by another one identical in every respect after three years at a salvagevalue of $4,000, if desired. Use a MARR of 11%,a six-year study period, and PW calculations todecide whether the existing asset should be replacedby the new one

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