ENGINEERING ECONOMIC ENHANCED EBOOK
14th Edition
ISBN: 9780190931940
Author: NEWNAN
Publisher: OXF
expand_more
expand_more
format_list_bulleted
Question
Chapter 13, Problem 16P
To determine
To find:Optimal life for forklift.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
State-of-the-art digital imaging equipment purchased 2 years ago for $50,000 had an expected useful life of 5 years and a $5000 salvage value. After its installation the performance was poor, and it was upgraded for $20,000 one year ago. Increased demand now requires another upgrade for an additional $22,000 so that it can be used for 3 more years. Its new annual operating cost will be $27,000 with a $12,000 salvage after the 3 years. Alternatively, it can be replaced with new equipment costing $65,000, an estimated AOC of $14,000, and an expected salvage of $23,000 after 3 years. If replaced now, the existing equipment can be traded for only $7000. Use a MARR of 10% per year. (a) Determine whether the company should retain or replace the defender now. (b) Based on the poor experience with the current equipment, assume the person doing this analysis decides the challenger may be kept for only 2 years, not 3, with the same AOC and salvage estimates for the 2 years. What is the decision?
A 2000-pound, counterbalanced, propane forklift can be purchased for $30,000. Due to the intended service use, the forklift’s market value drops 20% of its prior year’s value in Years 1 and 2 and then declines by 15% until Year 10 when it will have a scrap/market value of $1000. Maintenance of the forklift is $500 per year during Years 1 and 2 while the warranty is in place. In Year 3 it jumps to $750 and increases $750 per year thereafter. What is the optimal life of the forklift using i = 10%?
A factory manager bought a rare machine for $10 million. of the machine The sales value at the end of the first year will be $3 million and the machine will be sold by antique dealers. It is estimated to be valued at $500,000 due to the Initial cost of maintenance Expected to be $300,000 in 3 years and double each year thereafter. In this way, the maintenance cost of the 4th year is $600,000, the maintenance cost of the 5th year is $1,200,000, etc. will be. Calculate the economic life of this machine based on the Minimum Attractive Efficiency Ratio of 15%.
Chapter 13 Solutions
ENGINEERING ECONOMIC ENHANCED EBOOK
Ch. 13 - Prob. 1QTCCh. 13 - Prob. 2QTCCh. 13 - Prob. 3QTCCh. 13 - Prob. 4QTCCh. 13 - Prob. 5QTCCh. 13 - Prob. 1PCh. 13 - Prob. 2PCh. 13 - Prob. 3PCh. 13 - Prob. 4PCh. 13 - Prob. 5P
Ch. 13 - Prob. 6PCh. 13 - Prob. 7PCh. 13 - Prob. 8PCh. 13 - Prob. 9PCh. 13 - Prob. 10PCh. 13 - Prob. 11PCh. 13 - Prob. 12PCh. 13 - Prob. 13PCh. 13 - Prob. 14PCh. 13 - Prob. 15PCh. 13 - Prob. 16PCh. 13 - Prob. 17PCh. 13 - Prob. 18PCh. 13 - Prob. 19PCh. 13 - Prob. 20PCh. 13 - Prob. 21PCh. 13 - Prob. 22PCh. 13 - Prob. 23PCh. 13 - Prob. 24PCh. 13 - Prob. 25PCh. 13 - Prob. 26PCh. 13 - Prob. 27PCh. 13 - Prob. 28PCh. 13 - Prob. 29PCh. 13 - Prob. 30PCh. 13 - Prob. 31PCh. 13 - Prob. 32PCh. 13 - Prob. 33PCh. 13 - Prob. 34PCh. 13 - Prob. 35PCh. 13 - Prob. 36PCh. 13 - Prob. 37PCh. 13 - Prob. 38PCh. 13 - Prob. 39PCh. 13 - Prob. 40PCh. 13 - Prob. 41PCh. 13 - Prob. 42PCh. 13 - Prob. 43PCh. 13 - Prob. 44PCh. 13 - Prob. 45PCh. 13 - Prob. 46PCh. 13 - Prob. 47PCh. 13 - Prob. 48PCh. 13 - Prob. 49PCh. 13 - Prob. 50PCh. 13 - Prob. 51PCh. 13 - Prob. 52PCh. 13 - Prob. 53PCh. 13 - Prob. 54PCh. 13 - Prob. 55PCh. 13 - Prob. 56P
Knowledge Booster
Similar questions
- how to get number in red arrow?arrow_forwardA machine that cost $120,000 3 years ago can be sold now for $52,750. Its market value is expected to be $40,000 and $20,000 1 year and 2 years from now, respectively. Its operating cost was $18,000 for the first 3 years of its life, but the M&O cost is expected to be $23,000 for the next 2 years. A new improved machine that can be purchased for $136,750 will have an economic life of 5 years, and an operating cost of $9,000 per year, and a salvage value of $32,000 whenever it is replaced. At an interest rate of 10% per year, determine if the presently owned machine should be replaced now, 1 year from now, or 2 years from now. The annual worth of the existing machine one year from now is $- now is $- ], and the annual worth of the new machine is $- The presently owned machine should be replaced (Click to select) the annual worth of the existing machine two years fromarrow_forwardThree years ago, Witt Gas Controls purchased equipment for $80,000 that was expected to have a useful life of 5 years with a $9000 salvage value. Increased demand necessitated an upgrade costing $30,000 one year ago. Technology changes now require that the equipment be upgraded again for another $25,000 so that it can be used for 3 more years. Its annual operating cost will be $47,000, and it will have a $22,000 salvage after 3 years. Alternatively, it can be replaced with new equipment that will cost $68,000 with operating costs of $35,000 per year and a salvage value of $21,000 after 3 years. If replaced now, the existing equipment will be sold for $9000. Calculate the annual worth of the defender at an interest rate of 10% per year. Answer: $ 54,025 Subject: ENGINEERING ECONOMICS Lesson: Decisions Under Certaintyarrow_forward
- A machine that cost $120,000 3 years ago can be sold now for $51,500. Its market value is expected to be $40,000 and $20,000 1 year and 2 years from now, respectively. Its operating cost was $18,000 for the first 3 years of its life, but the M&O cost is expected to be $23,000 for the next 2 years. A new improved machine that can be purchased for $135,500 will have an economic life of 5 years, and an operating cost of $9,000 per year, and a salvage value of $32,000 whenever it is replaced. At an interest rate of 10% per year, determine if the presently owned machine should be replaced now, 1 year from now, or 2 years from now. The annual worth of the existing machine one year from now is $- 50500 O. the annual worth of the existing machine two years from now is $- 30,500 . and the annual worth of the new machine is $-112,500 The presently owned machine should be replaced now 13arrow_forwardWhite Oaks Properties builds strip shopping centers and small malls. The company plans to replace its refrigeration, cooking, HVAC, and other equipment with newer models in the entire center built 9 years ago. The original purchase price of the equipment was $766,000 nine years ago and the operating cost has averaged $240,000 per year. Determine the equivalent annual cost of the installed equipment, if the company can now sell it for $160,000. The company’s MARR is 25% per year. The equivalent annual cost of the installed equipment is $−arrow_forwardTo improve package tracking at a UPS transfer facility, conveyor equipment was upgraded with RFID sensors at a cost of $345,000. The operating cost is expected to be $148,000 per year for the first 3 years and $210,000 for the next 3 years. The salvage value of the equipment is expected to be $140,000 for the first 3 years, but due to obsolescence, it won’t have a significant value after that. The interest rate is 10% per year. Determine the ESL and equivalent AW using tabulated factors.arrow_forward
- Hydrochloric acid, which fumes at room temperatures, creates a very corrosive work environment. A mixing machine working in this environment is deteriorating fast and can be used for only 1 more year, at which time it will be scrapped. It was purchased 3 years ago for $88,000 and its operating cost for the next year is expected to be $67,000. A more corrosion-resistant challenger will cost $226,000 with an operating cost of $54,000 per year. It is expected to have a $60,000 salvage value after its 10-year ESL. At an interest rate of 15% per year, what minimum trade-in value will make the challenger economically attractive? On equating the AW values of the defender and the challenger, to calculate the minimum trade-in value of the challenger, the spreadsheet tool that should be used is GOAL SEEK The minimum trade-in value that will make the challenger economically attractive will be $ 74,457arrow_forwardHydrochloric acid, which fumes at room temperatures, creates a very corrosive work environment. A mixing machine working in this environment is deteriorating fast and can be used for only 1 more year, at which time it will be scrapped. It was purchased 3 years ago for $88, 000 and its operating cost for the next year is expected to be $67,000. A more corrosion-resistant challenger will cost $226,000 with an operating cost of $54,000 per year. It is expected to have a $ 60,000 salvage value after its 10-year ESL. At an interest rate of 15% per year, what minimum trade - in value will make the challenger economically attractive? On equating the AW values of the defender and the challenger, to calculate the minimum trade - in value of the challenger, the spreadsheet tool that should be used is GOAL SEEK. The minimum trade - in value that will make the challenger economically attractive will be $54, 703.96. Give correct answer Hydrochloric acid, which fumes at room temperatures, creates a…arrow_forwardA large city in mid-west needs to buy a street-cleaning machine. A used vehicle will cost $75000 and has a market value of $20000 after its five-year life. A new system cost $150000 and has a market value of $40000 after five-years. The new system has some features that reduce labor hours compared with used system. the used system requires labor hours of 8 hours per day and 20 days per month. the labor costs are $50 per hour. the MARR is 12%. if the new system is expected to be able to reduce labor hours by 20% compared with the used system, which system should the city purchase? and how many hours must the system be operated at the break even?arrow_forward
- A critical machine in BHP Billiton's copper refining operation was purchased 7 years ago for $160,000. Last year a replacement study was performed with the decision to retain it for 3 more years. The situation has changed. The equipment is estimated to have a value of $8000 if "scavenged" for parts now or anytime in the future. If kept in service, it can be minimally upgraded at a cost of $43,000 to make it usable for up to 2 more years. Its operating cost is estimated at $22,000 in the first year and $29,000 in the second year. Alternatively, the company can purchase a new system, the challenger, that will have an AWC of $-51,000 over its ESL. Use a MARR of 10% per year and annual worth analysis to determine when the company should replace the machine. The AW value of the challenger is $- 47254.1275 and the AW value of the defender at the end of year 2 is $- 59000 The company should replace the machine after two yearsarrow_forwardA critical machine in BHP Billiton's copper refining operation was purchased 7 years ago for $160,000. Last year a replacement study was performed with the decision to retain it for 3 more years. The situation has changed. The equipment is estimated to have a value of $8000 if "scavenged" for parts now or anytime in the future. If kept in service, it can be minimally upgraded at a cost of $43,000 to make it usable for up to 2 more years. Its operating cost is estimated at $22,000 in the first year and $29,000 in the second year. Alternatively, the company can purchase a new system, the challenger, that will have an AWC of $-55,000 over its ESL. Use a MARR of 10% per year and annual worth analysis to determine when the company should replace the machine. The AW value of the challenger is $- and the AW value of the defender at the end of year 2 is $- The company should replace the machine (Click to select)arrow_forwardPlease answer by hand calculations not excel:A presently owned machine can last 3 more years, if properly maintained at a cost of $15,000 per year. Its AOC is $31,000 per year. After 3 years, it can be sold for an estimated $9000. A replacement costs $80,000 with a $10,000 salvage value after 3 years and an operating cost of $19,000 per year. Different vendors have offered $10,000 and $20,000, respectively, for the current system as trade-in for the replacement machine. At i = 12% per year, perform a replacement study and determine whether the defender should be retained or replaced. 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.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education