You are asked to evaluate two alternatives listed in the table below based on their net present value using an interest rate of 9%. tern. Initial Cost Annual O&M Overhaul Cost (year 8) $85,000 A B $150,000 $350,000 $38,000 $18,000 Salvage Value $40,000 0 Life (years) 4 12
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- Two alternatives are being considered for installation. Which should be selected based on an interest rate of 5.6% per year ? Alternative A Alternative B First Cost, $ 135,000 462,000 Annual Operating Cost, $/yr 76,000 34,600 Salvage value, $ 71,200 n/a Life, years 9 ∞1. Two alternatives are being considered for installation. Which should be selected based on a present worth comparison at an interest rate of 6% per year. Alternative A Alternative B First Cost, $ 17,650 22,900 Maintenance Cost, $/year 1700 1400 Salvage value, $ 10,500 17,000 Life, years 4 3From the given values below, which machine should be selected using (a) Present worth Method and (b) Future worth Method if interest rate is 10% per year? Machine Initial Cost (Php) Annual Operating Cost A В 146,000 15,000 220,000 10,000 75,000 25,000 Annual Revenue 80,000 10,000 Salvage Value Useful Life (years) 6
- PART B.) Decide which of the following alternatives should be selected (if one of them MUST be selected) using an Annual Worth Analysis assuming 12% interest. I want to see AWA and AWB calculated as part of the decision. First Cost, $ Annual Operating Cost, $/year Salvage Value, $ Life, years 50,000 10,000 90,000 4,000 13,000 15,000 6.PART A.) Decide which of the following machines should be selected (if one of them MUST be selected) using a Present Worth Analysis assuming 8% interest. I want to see PWp and PW calculated as part of the decision. First Cost, $ Annual Operating Cost, $/year Salvage Value, $ Life, years 20,000 4,000 15,000 5,000 5,000 2 5,000Q1- Consider the following two pumps at an interest rate of 15%. Use interest rate table method and spreadsheet method to determine which one should be installed based on present worth analysis? Brass Titanium First cost, $ Annual 0&M costs $/year Salvage value, $ Life -7500 -7500 -450 -350 1000 2000 8.
- Compare the alternatives shown on the basis of their capitalized costs using an interest rate of 10% per yearquarterly. Alternative M Alternative N First cost, P Annual operating cost, P per year 50,000 Salvage value, Life, years 150,000 800,000 10,000 1,000,000 8,000 5 251. Consider the following alternatives: First cost 5000 10,000 Annual Maintenance 500 200 End-of-useful-life salvage value 600 1000 Useful life 5 years 15 years Based on an 8% interest rate, which alternative should be selected? Use: a) Rate of return Analysis b) Future Worth analysis.Given the following table for two alternatives. consider that the interest rate = 10% Alternative A B First cost, $ -90,000 -750,000 AOC, $/year -50,000 -10,000 Salvage value, $ Life, years 8,000 2,000,000 00 All of the following equations for calculating the capitalized cost of alternative B are correct, except: Select one: = -750,000 – 10,000/0.10 a. + 2,000,000/(1+0.10) b. = [-750,000(0.10) – 10,000]/0.10 c. capitalized cost = -750,000 – 10,000/0.10 + 2000000 (0.10) d. capitalized cost = -750,000 – 10,000/0.10
- 1. Determine the B/C ratio for the following project. First Cost P100, 000 Project life, years 5 Salvage value P10, 000 Annual benefits P60, 000 Annual O and M P22, 000 Interest rate, % 15 Ans: B/C = 1.16Quiz 2: Select the best alternative plan from the table below using the Annual worth analysis (AW). (Draw the cash flow diagram) Annual Salvage Life time i- (years) Other First Cost (Present) Operating cost (AOC) Plan value payments - $ 800,000 - $(mn*1000) $ 200,000 $ 26,400 8. 4% -$ 23,000 Every 7 -$ 2,800,000 Infinity 4% - $ 16,000 (forever) - $(mn*1000) years $2,000,000 -$(mn*1000) 31 4% $12,000 Select the best alternative plan from the table below using the Annual worth analysis (AW). (Draw the cash flow diagram)5. The data below are estimated for a project study. į = 10% Plan A Initial Investment Annual Operating Cost Life Salvage Value Annual Revenue Plan B Initial Investment Annual Revenue Annual Disbursement Life Salvage Value P 35,000 P 6,450 4 years none 19,000 P 50,000 P 25,000 P 13830 8 years none Which plan would you recommend? Use Present Worth Method and 8 years of study period. Profit for Plan A = 9047.85 Profit for Plan B =9, 591.13