Two flash vaporizer machines are considered for the upgrade of biodiesel production. An engineer is asked to perform analyses to select the best machine. He prepares the following information for the evaluation. Machine X has a useful life of 8 years and machine Y has a useful life of 11 years. Compute the market value of Machine Y at the end of year 8 and determine which machine should be selected based on annual worth method using an interest rate of 13% per year and a study period of 8 years. Machine X First costs Net annual revenue Market value at the end of the useful life Life, years Y $29,000 $32,000 $10,500 $12,000 $6900 $6000 8 11

Two flash vaporizer machines are considered for the upgrade of biodiesel production. An engineer is asked to perform analyses to select the best machine. He prepares the following information for the evaluation. Machine X has a useful life of 8 years and machine Y has a useful life of 11 years. Compute the market value of Machine Y at the end of year 8 and determine which machine should be selected based on annual worth method using an interest rate of 13% per year and a study period of 8 years. Machine X First costs Net annual revenue Market value at the end of the useful life Life, years Y $29,000 $32,000 $10,500 $12,000 $6900 $6000 8 11

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Two flash vaporizer machines are considered for the upgrade of biodiesel production. An engineer is asked to perform
analyses to select the best machine. He prepares the following information for the evaluation. Machine X has a useful
life of 8 years and machine Y has a useful life of 11 years. Compute the market value of Machine Y at the end of year 8
and determine which machine should be selected based on annual worth method using an interest rate of 13% per
year and a study period of 8 years.
Machine
X
First costs
Net annual revenue
Market value at the end of the
useful life
Life, years
O a. Y
O b. X
Y
$29,000 $32,000
$10,500 $12,000
$6900
$6000
8
11

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