Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 10, Problem 17P
To determine

Calculate the present wroth.

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An organization completes the purchase of new asset at a cost of $25,000. It has an yearly operating cost of $3,000 for delivery and installation It has a depreciable life of six (6) years at the end of which the salvage value will be $3,000 Utilizing 200% Declining Balance (DB) only, complete the table below If a returm on investment (rate of return) of 10% is requred, what is the minimum annual saving in needed? If the service life is decreased from six (6) years to five (5) years, what is the minimum annual savings for the firm to acheive a 10% return on investment? If the annual operating cost increase by 109%, what will be the minimum annual savings needed? Round all answers up the the nearest dollar (i.e. $2.322 = $3.00)
Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for $1.4 million and will have a salvage value of $200,000 after 8 years. Its use will create an opportunity to increase sales by $650,000 per year and will have operating expenses of $250,000 per year. Corporate income taxes are 40 percent. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, for 8 years. After-tax MARR is 10 percent. Use 7- years class depreciation for MACRS and IRR if the chamber is kept
H8. A piece of equipment has a capital investment of $1,140,000 and an annual operating expense of $115,500. The life of the equipment is 10 years, the effective income tax rate is 40%, and the after-tax MARR is 9% per year. The equipment qualifies for seven-year MACRS (GDS) properties. Perform after-tax PW analysis.
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