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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 dedine in value by 20 percent of current value each year Ins follows. Asset First Cost Initial Operating Cost A $135.000 B$135,000 $30,000 $30,000 90000 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%. Total [ a. The economic life of asset A is years, and the economic life of asset B is years. (Type whole numbers.) b. Create a diagram for asset A. Choose the correct diagram below. OA Rate of Operating Cost Increase Q Maintenance …………………………êões a 12.5%/year 12.5%/year MARR 5% 25% OB 90000₂ Total 4444444 ******** Maintenance

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 dedine in value by 20 percent of current value each year Ins follows. Asset First Cost Initial Operating Cost A $135.000 B$135,000 $30,000 $30,000 90000 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%. Total [ a. The economic life of asset A is years, and the economic life of asset B is years. (Type whole numbers.) b. Create a diagram for asset A. Choose the correct diagram below. OA Rate of Operating Cost Increase Q Maintenance …………………………êões a 12.5%/year 12.5%/year MARR 5% 25% OB 90000₂ Total 4444444 ******** Maintenance

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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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 follows. OA Asset A 2 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%. years, and the economic life of asset B is years. a. The economic life of asset A is (Type whole numbers.) b. Create a diagram for asset A. Choose the correct diagram below. 90000 О с. First Cost Initial Operating Cost $30,000 $30,000 $135,000 $135,000 90000 Total DOCENT Maintenance Capital Year BAAD Total Maintenance Year Capital Rate of Operating Cost Increase 12.5%/year 12.5% / year 16 Q MARR 5% 25% Ов B EAC (Asset A) 90000 O D. 90000- Total 44444444 ****** Maintenance Capital Year Total 4 4 4 4 4 4 4 4 4 4 Maintenance Year Capital 4 4 C
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 follows. OA Asset A 2 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%. years, and the economic life of asset B is years. a. The economic life of asset A is (Type whole numbers.) b. Create a diagram for asset A. Choose the correct diagram below. 90000 О с. First Cost Initial Operating Cost $30,000 $30,000 $135,000 $135,000 90000 Total DOCENT Maintenance Capital Year BAAD Total Maintenance Year Capital Rate of Operating Cost Increase 12.5%/year 12.5% / year 16 Q MARR 5% 25% Ов B EAC (Asset A) 90000 O D. 90000- Total 44444444 ****** Maintenance Capital Year Total 4 4 4 4 4 4 4 4 4 4 Maintenance Year Capital 4 4 C
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