The replacement of a planning machine is being considered by the Reardorn Furniture Company. (There is an indefinite future need for this type of machine.) The best challenger will cost $30,000 for installation and will have an estimated economic life of 11 years and a $2,000 MV at that time. It is estimated that annual expenses will average $15,500 per year. The defender has a present BV of $6,000 and a present MV of $3500. Data for the defender for the next three years are given below. Using a before-tax interest rate of 10% per year, make a comparison to determine whether it is economical to make the replacement now. Year MV at End of BV at End of Expenses during Year Year the Year $-1,500 $4,500 $18,000 - 1,750 -2,000 3,000 25,000 1,500 32,000 Click the icon to view the intereat and annuity table for discrete compounding when i 10% per year. Fill in the table for the EUAC values for the defender for years 1-3. (Round to the nearest dollar.) Year EUAC 25350 $24755 3 25758

The replacement of a planning machine is being considered by the Reardorn Furniture Company. (There is an indefinite future need for this type of machine.) The best challenger will cost $30,000 for installation and will have an estimated economic life of 11 years and a $2,000 MV at that time. It is estimated that annual expenses will average $15,500 per year. The defender has a present BV of $6,000 and a present MV of $3500. Data for the defender for the next three years are given below. Using a before-tax interest rate of 10% per year, make a comparison to determine whether it is economical to make the replacement now. Year MV at End of BV at End of Expenses during Year Year the Year $-1,500 $4,500 $18,000 - 1,750 -2,000 3,000 25,000 1,500 32,000 Click the icon to view the intereat and annuity table for discrete compounding when i 10% per year. Fill in the table for the EUAC values for the defender for years 1-3. (Round to the nearest dollar.) Year EUAC 25350 $24755 3 25758

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

Please don’t use excel. Please provide equations used.
one factory manager bought a rare machine for $10 million. It is estimated that the sales value of the machine at the end of the first year will be $3 million and the machine will be worth $500,000 due to the demand by the antique dealers. The maintenance cost is expected to be $300,000 in the first 3 years and double each year thereafter. In this way, the maintenance cost of the 4th year is $600,000, the maintenance cost of the 5th year is $1,200,000, etc. Calculate the economic life of this machine based on a 15% MCVO. A) 7 B) 3 C)12 D) 6 E) 9
The replacement of a laser cutting machine is being considered. The best available machine on market has an estimated economic life of 12 years with an equivalent annual worth of S-22,800. The current used machine, which was bought three years ago for $36, 000, has a present market value of 54,000 with the following data for the next three years: Estimated Market Value Year S per Year at End of Year., S 20,000 3,000 25.000 2,500 3 30.000 2.000 Select when to replace the machine, using Economic Service Life method at an interest rate of 4% per year, O Replace now O Replace in year one O Replace in year two O Replace in year three
Rubber: Initial investment: $132,000 Annual cost: $43,000 Annual revenue: $100,000 Salvage value: $11,000 Useful life: 10 years Using the cotermination assumptions, a study period of 6 years, and a MARR of 9%, what is the present worth of the rubber alternative? Assume that the rubber alternative's equipment has a market value of $17,000 at the end of Year 6. Typed numeric answer will be automatically saved.
DBS Builders Pte Ltd purchased an asphalt paver eight years ago for $280,000. The estimated operation and maintenance (O&M) costs for the next three years are $56,000, $68,000, and $82,000, respectively. The asphalt paver can be sold for $65,000 now, for $57,000 next year, for $45,000 two years from now, and for $28,000 three years from now. 4. The latest asphalt paver in the market costs $290,000 and has an estimated service life of five years. The salvage value is estimated to be $50,000 after five years. The expected annual O&M costs will be $6,000 for the first year and increase by $3,800 per year thereafter. If a before-tax minimum attractive rate of return (MARR) of 12% is estimated, what replacement decision should DBS Builders make?
A city water and waste-water department has a four-year-old sludge pump that was initially purchased for $65,000. This pump can be kept in service for an additional four years, or it can be sold for $36,500 and replaced by a new pump. The purchase price of the replacement pump is $48,000. The projected MVs and operating and maintenance costs over the four-year planning horizon are shown in the table that follows. Assuming the MARR is 12%, (a) determine the economic life of the challenger and (b) determine when the defender should be replaced. Defender Challenger Year MV at EOY O&M Costs MV at EOY O&M Costs 1 $25,000 $17,500 $42,000 $12000 15,000 18,000 21,000 2 21,500 18,000 14,500 20,500 23,500 34,500 27,000 19,500 3 4 26,500 Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year. ... a. The economic life of the challenger is year(s). (Round to the nearest whole number.)
PROBLEM: A company that sells computers has proposed to a public utility company that it purchase a small electronic computer for 1,000,000 to replace ten calculating machines and their operators. An annual service maintenance contract for the computer will be provided at a cost of 100,000 per year. One operator will be required at a salary of 96,000 per year and one programmer at a salary of 144,000 per year. The estimated economic life of the computer is 10 years. The calculating machine costs 7,000 each when new, 5 years ago, and presently can be sold for 2,000 each. They have an estimated life of 8 years and an expected ultimate trade-in value of 1,000 each. Each calculating machine operator receives 84,000 per year. Fringe benefits for all labor cost 8% of annual salary. Annual maintenance costs on the calculating machines have been 500 each. Taxes and insurance on all equipment is 2% of the first cost per year. If capital costs the company about 25%, would you recommend the…
2
Question 2 With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine X that will render its AW equal to that of machine Y at an interest rate of 10% per year. Determine the replacement value. Machine X Machine Y Market Value, $ ? 87,000 Annual Cost, $ per Year −58,000 −40,000 for year 1,increasing by 2000 per year thereafter. Salvage Value 16,500 21,000 Life, Years 3 5 The replacement value is $ . Full explain this question and text typing work only thanks
The cost of a embroidery machine is P1.2M and the cost of installation isP50,000. If the salvage value is 10% of the cost of the machine at the end of 10 years,determine the book value at the end of the 3rd year. Use Straight-Line Method. Show complete and logical solution
I’m unsure of any of the answers
A stamping machine currently has a salvage value of $10 000, and this will drop by 20% per year from now on. Its expected maintenance costs are $1 000 for this year, but in the following year it is expected to need a major overhaul, costing $3 500. In the year following the overhaul, its maintenance costs will be $500, and these will then go up by 30% per year. Your MARR is 10%. There is a challenger available that will do the same job for an EAC of $3 400. When should you replace the old machine? [Enter your response in years]