You must evaluate the alternatives below to increase plant capacity for manufacturing high-pressure hydraulic hoses. Find the present worth of each alternative at an interest rate of 14% per year, assuming a life of 5 years for both alternatives. Which alternative should be selected and what is its present worth (select the closest value)? Alternative X First Cost $25,000 Maintenance cost, per Year $8,000 Salvage Value $2,500 Option X with a PW--$51.170 Option Y with a PW--$94,620 Option Y with a PW - $55,380 Option X with a PW --$1,170 Y $75,000 $7,000 $8,500

You must evaluate the alternatives below to increase plant capacity for manufacturing high-pressure hydraulic hoses. Find the present worth of each alternative at an interest rate of 14% per year, assuming a life of 5 years for both alternatives. Which alternative should be selected and what is its present worth (select the closest value)? Alternative X First Cost $25,000 Maintenance cost, per Year $8,000 Salvage Value $2,500 Option X with a PW--$51.170 Option Y with a PW--$94,620 Option Y with a PW - $55,380 Option X with a PW --$1,170 Y $75,000 $7,000 $8,500

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 company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows estimated. First cost, $ −900,000 Equipment replacement cost in year 2, $ −300,000 Annual operating cost, $/year −950,000 Salvage value, $ 250,000 Life, years 4 At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using tabulated factors. The equivalent annual cost of the project is $− . Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
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Investment Cost Useful Life 15 years Market Value, aka salvage value (EOY 15) 3,000 Annual Operating Expenses Overhaul cost--EOY 5 Overhaul cost--EOY10 ('000s of $) 13,000 $19,553,380. NO. 1,000 $19,210,488. YES 200 Evaluate a combined cycle power plant on the basis of the PW method when the MARR is 12% per year. Pertinent cost data are shown in the table. Should the plant be built? 550 $19,553,380. Impossible to say without additional information. O $19,210,488. Impossible to say without additional information.
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The survey firm of Layer, Anderson, and Pope (MAP) LLP is considering the purchase of a pieceof new GPS equipment. Data concerning the alternative under consideration are presented below.First Cost $28,000Annual Income 7,000Annual Costs 2,500Recalibration at end of Year 4 4,000Salvage Value 2,800If the equipment has a life of eight years and MAP’s minimum attractive rate of return (MARR) is5%, what is the annual worth of the equipment?
Compare the alternatives shown on the basis of their capitalized costs using a MARR of 10% per year. Alternative First cost, $ Annual operating cost, $ per year Salvage value, $ Life, years M -155,000 -30,000 8,000 5 N -875,000 -11,000 1,000,000 00 The capitalized cost for alternative M is $- The best alternative selected on the basis of their capitalized costs is alternative M and the capitalized cost for alternative N is $-
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b) National Homebuilders, Inc., plans to purchase new cut-and-finish equipment. The details of the 2 alternative options are summarized in the table below. The interest rate is 10% per year. First Cost, S Annual Operating Cost, S Salvage Value, S Equipment Life (years) Consider only machine A now. Alternative A 15,000 3,500 1,000 4 Alternative B 18,000 3,100 2,000 8 a) Calculate the AW of Machine A for one life cycle. b) Calculate the AW of Machine A for LCM = 8 years (2 life cycles). c) Demonstrate the equivalence of AW over 2 life cycles and AW over one life cycle.
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A drug store is looking into the possibility of installing a 24/7-automated prescription refill system to increase its projected revenues by $20,000 per year over the next 5 years. Annual expenses to maintain the system are expected to be $5,000. The system will cost $50,000 and will have no market value at the end of the 5-year study period. The store’s MARR is 20% per year. Use the AW method to evaluate this investment.
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