The following pair of assets differ only in the MARR. The problem asks you to determine the effect of this difference on the economic life and to explain the result.All assets decline in value by 20 percent of current value each year. Installation costs are zero for all assets. Further data concerning the four pairs of assets aregiven in the table that follows.Initial OperatingRate of OperatingAssetFirst CostCostCost IncreaseMARR$125,000$125,000$35,000$35,00011.5%/year11.5%/yearA5%25%a. Determine the economic lives for assets A and B.b. Create a diagram showing the EAC(capital), the EAC(operating), and the EAC(total) for assets A and B.c. Explain the difference in economic life between A and B.Click the icon to view the table of compound interest factors for discrete compounding periods when i = 5%.a. The economic life of asset A is 4 years, and the economic life of asset B is 7 years.(Type whole numbers.)

The following pair of assets differ only in the MARR. The problem asks you to determine the effect of this difference on the economic life and to explain the result. All assets decline in value by 20 percent of current value each year. Installation costs are zero for all assets. Further data concerning the four pairs of assets are given in the table that follows. Initial Operating Rate of Operating Cost Increase Asset First Cost Cost MARR $125,000 $125,000 A $35,000 $35,000 11.5%/year 11.5%/year 5% В 25% a. Determine the economic lives for assets A and B.

The following pair of assets differ only in the MARR. The problem asks you to determine the effect of this difference on the economic life and to explain the result. All assets decline in value by 20 percent of current value each year. Installation costs are zero for all assets. Further data concerning the four pairs of assets are given in the table that follows. Initial Operating Rate of Operating Cost Increase Asset First Cost Cost MARR $125,000 $125,000 A $35,000 $35,000 11.5%/year 11.5%/year 5% В 25% a. Determine the economic lives for assets A and B.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

A commercial investment property was purchased for $22,000,000. The property's net lettable area is 3,200 m2. The property is operating at a stabilised occupancy of 90.0%. The leases are gross and the annual base rent in the first year is $590 per m2. The rent is reviewed annually and increased at a fixed rate of 2.00%. The building doesn't generate any miscellaneous income. The fixed OPEX are $75 per m2 and variable OPEX are $90 per m2 in the first year. The annual OPEX inflation is 4.50%. The property is purchased with 60.00% in debt financing with a fully amortising loan for a term of 20 years, monthly payments and an annual interest rate of 5.65%. Calculate Year 3 Equity Dividend Rate. Enter your answer without the % sign rounded to two decimal places
5. Solve the given question and give the correct answer.
ENGINEERING ECONOMY RATE WILL BE GIVEN. WRITE THE COMPLETE SOLUTIONS/EXPLANATION LEGIBLY OR TYPEWRITTEN. GIVE STRAIGHT TO THE POINT EXPLANATION. Your company presently uses a crew of its own employees for all major maintenance. On average, 44 major repairs are performed each year at 20 lost production hours per repair. Keeping the crew costs $1,300,000 per year plus any lost production cost. Lost production costs are estimated at $2,500 per hour. Your company is considering replacing its in-house maintenance work with an outside company (Ajax) working under an annual maintenance contract. This proposal will pay Ajax $2,180,000 per year but your company will still have to pay for all lost production time. Ajax claims that the time per repair will decrease because of the contractors’ substantial maintenance experience. Assuming the number of major repairs and the cost of lost production time remain the same, how much time per repair is the maximum allowable for Ajax to be the…
Please do this problem in excel( including calculations)
SUBJECT: Engineering Economics Number 5
According to indirect method of cash flow statement, one of the adjustments needed to record is the adjustment about the useful lives of non-current assets. Select one: 1- True 2-False
You are considering an investment project with the financial information provided below. Suppose the company is most concerned about the impact of its price estimate on the project's rate of return. How would you address this concern? The break-even value of unit price is ?
What is the total lifetime cost of the system given the following information? The initial cost of the system is $4800. The system has annual maintenance costs of $175. On the fourth year, an overhaul cost of $350 is scheduled. The system is expected to last for 5 years. The discount rate is 8%. Answer to the nearest dollar $________.00.
The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash Accounts receivable Inventory Buildings and equipment, net Accounts payable Common shares Retained earnings a. The gross margin is 25% of sales. b. Actual and budgeted sales data are as follows: March (actual) April May June $50,000 $60,000 $72,000 $ 8,000 20,000 36,000 120,000 21,750 150,000 12,250 July $90,000 $48,000 c. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are the result of March credit sales. d. Each month's ending inventory should equal 80% of the following month's budgeted cost of goods sold. e. One-half of a month's inventory purchases is paid for in the month of purchase; the other one-half is paid for in the following month. The accounts payable at March 31 are the result of March purchases of inventory. f. Monthly expenses are as follows:…
If the profit function for selling smart phone screen magnifier is -4500p2 + 561500p – 11898000, what is the maximum profit that can be expected from selling smart phone screen magnifiers? Question 1 options: $ 0, no profit $ 5,617,681 $ 1,717,764 -$ 8,004,171
the manager has determined that a potential new product can be sold at a priceof$12.50 each. The cost to produce the product is $7.00, but the equipment necessary for production must be leased for $20,000 per year. What is the break-even point?
Q. 2