You just purchased a pin-inserting machine to relieve some bottleneck problems that have been created in manufacturing a PC board. The machine cost $53,000 and has an estimated service life of six years. At that time, the estimated salvage value would be $5,700. The machine is expected to operate 3,200 hours per year. The expected annual operating and maintenance cost would be $6,400. If your firm's interest rate is 11%, what would be the machine cost (owning and operating) per hour? Click the icon to view the interest factors for discrete compounding when /= 11% per year. The machine cost per hour would be $ (Round to the nearest cent.)

You just purchased a pin-inserting machine to relieve some bottleneck problems that have been created in manufacturing a PC board. The machine cost $53,000 and has an estimated service life of six years. At that time, the estimated salvage value would be $5,700. The machine is expected to operate 3,200 hours per year. The expected annual operating and maintenance cost would be $6,400. If your firm's interest rate is 11%, what would be the machine cost (owning and operating) per hour? Click the icon to view the interest factors for discrete compounding when /= 11% per year. The machine cost per hour would be $ (Round to the nearest cent.)

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

Lang Industrial Systems Company (LISC) is trying to decide between two different conveyor belt systems. System A costs $252,000, has a four-year life, and requires $78,000 in pretax annual operating costs. System B costs $354,000, has a six-year life, and requires $72,000 in pretax annual operating costs. Suppose LISC always needs a conveyor belt system; when one wears out, it must be replaced. Assume the tax rate is 34 percent and the discount rate is 8 percent. Calculate the EAC for both conveyor belt systems. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) System A System B EAC 127564.C Which conveyor belt system should the firm choose? • System B ○ System A
The president's executive jet is not fully utilized. You judge that its use by other officers would increase direct operating costs by only $37,000 a year and would save $100,000 a year in airline bills. On the other hand, you believe that with the increased use the company will need to replace the jet at the end of three years rather than four. A new jet costs $1.27 million and (at its current low rate of use) has a life of Five years. Assume that the company does not pay taxes. All cash flows are forecasted in real terms. The real opportunity cost of capital is 10%. a. Calculate the equivalent annual cost of a new jet. Note: Do not round intermediate calculations. Enter your answer in dollars not in millions. Round your answer to 2 decimal places. Enter your answer as a positive value. b. Calculate the present value of the additional cost of replacing the jet one year earlier than under its current usage. Note: Do not round intermediate calculations. Enter your answer in dollars not…
Consider a palletizer at a bottling plant that has a first cost of $150,000, operating and maintenance costs of $17,500 per year, and an estimated net salvage value of $25,000 at the end of thirty years. Assume an interest rate of 8%. What is the future equivalent cost of the investment if the planning horizon is thirty years? $3,517,000 $3,371,000 $3,623,000 $3,980,000
A printing machine is bought at $1 million and is estimated to have a salvage value of $100,000 after 500,000 copies. The annual cost of renting the space for the business is $100,000, power cost per copy is $1.50, and maintenance and paper cost per copy is $3. The expected annual production of the machine is 100,000 copies. Annual interest is 12%. Determine: a. The annual operation and maintenace cost of the machine b. The annual depreciation of the machine. c. Production cost per copy. Show your solution.
J&M Manufacturing plans on purchasing a new assembly machine for $30,000 to automate one of its current manufacturing operations. It will cost an additional $5,500 to have the new machine installed. With the new machine, J&M expects to save $11,000 in annual operating and maintenance costs. The machine will last five years with an expected salvage value of $6,000. a. How long will it take to recover the investment (plus installation cost)? The payback period is _______years. (Round up to the nearest whole number.) b. If J&M's interest rate is known to be 13%, determine the discounted payback period. The discounted payback period is _______years. (Round up to the nearest whole number.)
A particular chemical process deposits scale on the inside of pipes. The scale cannot be removed, but increasing the pumping pressure can maintain the flow through the narrower diameter. The pipe costs $20 per foot to install, and it has no salvage value when it is removed. The pumping costs are $8 per foot of pipe initially, and they increase annually by $5 per year starting in year 2. What is the economic life of the pipe if the interest rate is 12% ?
A 2-ton hydraulic press is needed to add to production. This equipment has an initial purchase and installation cost of $190,000. In addition, it has yearly operation costs of $1000 and maintenance costs of $1500. Each year we expect an additional $32,000 in revenue resulting from this purchase. The press is expected to have a salvage value of $20,000 at the end of its 10-year lifetime. Using an interest rate of 12%, what is the annual equivalent (AE) for the purchase of this equipment over its lifetime? If there is an annual loss enter the value as negative and if there is an annual profit enter the value as positive.
Question 3 Consider a proposal to enhance production of tortillas en a taqueria. The new machine is estimated to cost $33 million and will incur an additional $1.5 million per year in maintenance costs. The machine will produce annual savings of $4.5 million each year. The Minimum acceptable rate of return (MARR) is 8.5% per year, and the study period is five years at which time the machine will be obsolete (worthless). What is the maximum (minimum) percentage of initial investmet change that reverse your decision?
Two machines are being considered to replace an old one. Machine 1 costs $80,000 and Machine 2 costs $120,000. Based on the capacity of these machines, it can be safely estimated that the revenue of Machine 1 will be $30,000 for year 1 and $41,500 for Machine 2. It is also assumed that the capacity could be increased and thereby the revenue by 20% every year for the next few years. The maintenance costs for both machines will be $2,000 and the amount will increase by $5,000 every year for the next few years. According to other companies that use similar machines, these machines are capable of producing products for 5 years before major breakdowns occur. Since this is a rough estimate, you can use straight-line depreciation over the next five years. The marginal tax rate for this company is 40%. a) Assuming an after-tax MARR of 15%, calculate the PW of the after-tax cash flow. b) Perform a sensitivity analysis by changing the after-tax MARR from 10% to 20%. Hint: You can use Excel’s…
Covington Corporation purchased a vibratory finishing machine for $20,000 in year 0. The useful life of the machine is 10 years, at the end of which the machine is estimated to have a salvage value of zero. The machine generates net annual revenues of $6,000. The annual operating and maintenance expenses are estimated to be $800. If Covington's MARR is 16%, how many years will it take before this machine becomes profitable? Assume that the cash flows occur continuously throughout the year. It will take years before this machine becomes profitable. (Round to one decimal place.)
Calculate the LCOE of the following power plants. Assume a useful life of 25 years and a discount rate of 5% for all plants, for simplicity. Report the LCOE for each plant.
A machine is under consideration for investment. The cost of the machine is 28,000. Each year it operates the machine generate a savings of P16,000. Given an effective annual interest rate of 16%. What is the discounted payback period in years, on the investment in the machine? Show complete solution.