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 14, Problem 45P
To determine

Calculate the net cash flow.

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A high-speed electronic assembly machine was purchased two years ago for $50,000. At the present time, it can be sold for $26,000 and replaced by a newer model having a purchase price of $37,500; or it can be kept in service for a maximum of one more year. The new assembly machine, if purchased, has a useful life of not more than two years. If the before-tax MARR is 12%, when should the old assembly machine be replaced? Use the following data table for your analysis. Challenger Defender O&M Costs $11,500 13,000 Year 0 Market Value $37,500 31,000 1 2 26,000 Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year. The minimum EUAC value of the challenger is $ Market Value $26,000 16,500 (Round to the nearest dollar.) O&M Costs $15,500
A high-speed electronic assembly machine was purchased two years ago for $50,000. At the present time, it can be sold for $24,000 and replaced by a newer model having a purchase price of $41,500: or it can be kept in service for a maximum of one more year. The new assembly machine, if purchased, has a useful life of not more than two years. If the before-tax MARR is 18%, when should the old assembly machine be replaced? Use the following data table for your analysis. Challenger TAerket Volye $41,500 De fender DRM Coste DRM Cost Merhel Voiue 524.000 30.000 17 500 $14,000 58.000 12,000 24,000 A Click the icon to view the interest and annuity table for discrete compounding when the MARR Is 18% per year The minimum EUAC value of the challenger is S (Round to the nearest dollar.) The marginal cost of keeping the defender in service for one more year is $(Round to the nearest dallar.) The old assembly machine should be replaced immediately in one year
Blue Inc. is considering producing a short-lived fad item, which it estimates will have a project life of three years. The only fixed assets it will need to purchase is some machinery which costs $120,000, plus $10,000 to modify it for this project's use. The machinery will be depreciated using the MACRS 5-year property class schedule, and Blue estimates that the machinery could be sold at the end of the third year for $70,000. In addition to expenditures on fixed assets, this project would cause the firm's cash needs to increase by $15,000 and additional raw materials inventory will go up by $5,000, both at Time 0. It also estimates that by the end of Year 1, accounts receivable will rise by $6,000. The new product's sales revenues are expected to be $90,000 each year. Total costs excluding depreciation are estimated to be $30,000. The company's marginal tax rate is 34 percent, and the firm estimates is overall WACC to be 16.00 percent. Inflation is zero. What are the project's NPV…
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