Veritas Inc. has decided to acquire a new Hydraulic Excavator. It has three options. Caterpillar: purchase cost of $354,055 and operating costs of $28,121 per year (paid at the end of each year). John Deere: purchase cost of $288,413 and operating costs of $21,091 per year (paid at the end of each year). Volvo: purchase cost of $323,238 and operating costs of $15,484 per year (paid at the end of each year). Assume that Geek Inc. has a budget of $335,269 and all excavators have a service life of 13 years. Based on the defender-challenger approach and given that the MARR is 10%, compute the incremental Benefit-Cost ratio of choosing the best excavator (note: round your answer to two decimal places; do not include spaces, dollar signs, or commas). Indicate your recommendation as follows: - answer "0" (without the commas) if your recommendation is the Caterpillar; - answer "1" (without the commas) if your recommendation is the John Deere; - write down as your answer the value of the incremental B-C ratio if your recommendation is Volvo.

Veritas Inc. has decided to acquire a new Hydraulic Excavator. It has three options. Caterpillar: purchase cost of $354,055 and operating costs of $28,121 per year (paid at the end of each year). John Deere: purchase cost of $288,413 and operating costs of $21,091 per year (paid at the end of each year). Volvo: purchase cost of $323,238 and operating costs of $15,484 per year (paid at the end of each year). Assume that Geek Inc. has a budget of $335,269 and all excavators have a service life of 13 years. Based on the defender-challenger approach and given that the MARR is 10%, compute the incremental Benefit-Cost ratio of choosing the best excavator (note: round your answer to two decimal places; do not include spaces, dollar signs, or commas). Indicate your recommendation as follows: - answer "0" (without the commas) if your recommendation is the Caterpillar; - answer "1" (without the commas) if your recommendation is the John Deere; - write down as your answer the value of the incremental B-C ratio if your recommendation is Volvo.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A subsidiary of a major furniture company manufactures wooden pallets. The plant has the capacity to produce 300,000 pallets per year. Presently the plant is operating at 70% of capacity. The selling price of the pallets is $18.25 per pallet and the variable cost per pallet is $15.75. At zero output, the subsidiary plant’s annual fixed costs are $550,000. This amount remains constant for any production rate between zero and plant capacity. Solve, a. With the present 70% of capacity production, what is the expected annualprofit or loss for the subsidiary plant. b. What annual volume of sales (units) is required in order for the plant to break even? c. What would be the annual profit or loss if the plant were operating at 90% of capacity? d. If fixed costs could be reduced by 40%, what would be the new breakeven sales volume?
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Quattro began operations in April of this year. It makes all sales on account, subject to the following collection pattern: 25% are collected in the month of sale; 55% are collected in the first month after sale: and 20% are collected in the second month after sale. If sales for April, May, and June were $64,000, S84,000, and S74,000, respectively, what were the firm's budgeted collections for June? $18,500. S56,200. S64,700. S77,500. Some other amount.
Subject: Engineering Economics Need Step by step solution within 30 minutes.