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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 resu 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 MARR 5% 25% Asset First Cost Cost $35,000 $35,000 Cost Increase S120,000 13.5%lyear 13.5%/year A B $120,000 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 years, and the economic life of asset B is years.

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 resu 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 MARR 5% 25% Asset First Cost Cost $35,000 $35,000 Cost Increase S120,000 13.5%lyear 13.5%/year A B $120,000 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 years, and the economic life of asset B is years.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please answer A by filling in the blanks, ignore b and c, thank you
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 Cost $35,000 $35,000 Rate of Operating Asset First Cost Cost Increase MARR $120,000 $120,000 13.5%/year 13.5%/year A 5% В 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 years, and the economic life of asset B is years. (Type whole numbers.)
Transcribed Image Text: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 Cost $35,000 $35,000 Rate of Operating Asset First Cost Cost Increase MARR $120,000 $120,000 13.5%/year 13.5%/year A 5% В 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 years, and the economic life of asset B is years. (Type whole numbers.)
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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. Asset First Cost A B $130,000 $130,000 Initial Operating Cost $35,000 $35,000 a. Determine the economic lives for assets A and B. Rate of Operating Cost Increase 11.5%/year 11.5%/year MARR 5% 25% a. The economic life of asset A is years, and the economic life of asset B is (Type whole numbers.) years.
Transcribed Image Text: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. Asset First Cost A B $130,000 $130,000 Initial Operating Cost $35,000 $35,000 a. Determine the economic lives for assets A and B. Rate of Operating Cost Increase 11.5%/year 11.5%/year MARR 5% 25% a. The economic life of asset A is years, and the economic life of asset B is (Type whole numbers.) years.
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