Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 14, Problem 16P
To determine
Calculate the resale value.
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Hayden Inc. has a number of copiers that were bought four years ago for $27,000. Currently maintenance costs $2,700 a year,
but the maintenance agreement expires at the end of two years, and thereafter, the annual maintenance charge will rise to
$8,700. The machines have a current resale value of $8,700, but at the end of year 2, their value will have fallen to $4,200. By
the end of year 6, the machines will be valueless and would be scrapped.
Hayden is considering replacing the copiers with new machines,that would do essentially the same job. These machines cost
$32,000, and the company can take out an eight-year maintenance contract for $1,000 a year. The machines would have no
value by the end of the eight years and would be scrapped.
Both machines are depreciated using seven-year straight-line depreciation, and the tax rate is 40%. Assume for simplicity that
the inflation rate is zero. The real cost of capital is 7%.
a. Calculate the equivalent annual cost, if the copiers are: (i)…
One year ago, a machine was purchased at a cost of $2,000, to be useful for 6 years. However, the machine has failed to perform properly and has a cost of $500 per year for repairs, adjustments, and shutdowns. A new machine is available to accomplish the functions desired and has an initial cost of $3,500. Its maintenance costs are expected to be $50 per year during its service life of 5 years. The approximate market value of the present machine has been roughly $1,200. If the operating costs (other than maintenance) for both machines are equal, show whether it is economical to purchase the new machine. Perform a Replacement study using an interest rate of 12%, and assume that the salvage values will be negligible.
An auto-part manufacturer is faced with the prospect of replacing its old robot, which has been used in stamping operation for 10 years. This particular robot was installed at a cost of $100,000 and was assumed to have a 15-year life with no appreciable salvage value. The current annual operating costs are $20,000 for this old robot, and these costs are presumed to be the same for the rest of its life. A sales representative from Advanced Robotic Systems is trying to sell this company a new-highly efficient robot. The new system would require an investment of $200,000 for installation. The economic life of this new robot is estimated to be IO years with a salvage value of $18,000, and the robot will reduce annual operating costs to $5,000. No detailed agreement has been made with the sales representative about the disposal of the old robot. Determine therange of resale values associated with the old system that would justify installation of the new system at a MARR of 14%.
Chapter 14 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 14 - Prob. 1PCh. 14 - Prob. 2PCh. 14 - Prob. 3PCh. 14 - Prob. 4PCh. 14 - Prob. 5PCh. 14 - Prob. 6PCh. 14 - Prob. 7PCh. 14 - Prob. 8PCh. 14 - Prob. 9PCh. 14 - Prob. 10P
Ch. 14 - Prob. 11PCh. 14 - Prob. 12PCh. 14 - Prob. 13PCh. 14 - Prob. 14PCh. 14 - Prob. 15PCh. 14 - Prob. 16PCh. 14 - Prob. 17PCh. 14 - Prob. 18PCh. 14 - Prob. 19PCh. 14 - Prob. 20PCh. 14 - Prob. 21PCh. 14 - Prob. 22PCh. 14 - Prob. 23PCh. 14 - Prob. 24PCh. 14 - Prob. 25PCh. 14 - Prob. 26PCh. 14 - Prob. 27PCh. 14 - Prob. 28PCh. 14 - Prob. 29PCh. 14 - Prob. 30PCh. 14 - Prob. 31PCh. 14 - Prob. 32PCh. 14 - Prob. 33PCh. 14 - Prob. 34PCh. 14 - Prob. 35PCh. 14 - Prob. 36PCh. 14 - Prob. 37PCh. 14 - Prob. 38PCh. 14 - Prob. 39PCh. 14 - Prob. 40PCh. 14 - Prob. 41PCh. 14 - Prob. 42PCh. 14 - Prob. 43PCh. 14 - Prob. 44PCh. 14 - Prob. 45PCh. 14 - Prob. 46PCh. 14 - Prob. 47PCh. 14 - Prob. 48PCh. 14 - Prob. 49PCh. 14 - Prob. 1STCh. 14 - Prob. 2STCh. 14 - Prob. 3ST
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