Construction Accounting And Financial Management (4th Edition)
4th Edition
ISBN: 9780135232873
Author: Steven J. Peterson MBA PE
Publisher: PEARSON
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Chapter 17, Problem 36P
Your company has purchased a new excavator for $210,000. The excavator can be billed out at $180.00 per hour, has an hourly operation cost of $104.00 and a useful life of six years. At the end of six years, the excavator has a salvage value of $35,000. The operator cost is $36.00 per hour. Using a MARR of 25%, what is the minimum number of hours that must be billed each year in order for your company to break even?
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Two techniques can be used to produce expansion anchors. Technique A costs $90,000 initially and will have a $12,000 salvage value after 3 years. The operating cost with this method will be $33,000 in year 1, increasing by $2600 each year. Technique B will have a first cost of $113,000, an operating cost of $7000 in year 1, increasing by $7000 each year,and a $43,000 salvage value after its 3-year life. At an interest rate of 13% per year, which technique should be used on the basis of a present worth analysis? Notice that there are no revenues.
Please work out and do not use excel, however if you use excel please show how to input everything needed down to the formula, thank you!
A new bottle-capping machine costs 64,000, including 8,000 for installation. The machine is expected to have a useful life of
eight years with no salvage value at that time (assume straight-line depreciation). Operating and maintenace costs are expected
to be 4,000 for the first year, increasing by 1,500 each year thereafter. Interest is 13%.
Construct a spreadsheet that has the following headings: Year, Salvage Value, Maintenance Costs, EAC (Capital Costs), EAC
(Operating Costs), and EAC (Total Costs). Compute the EAC (Total Costs) if the bottle capper is kept for n years, n = 1,...,8.
What is the economic life of the bottle capper (in years)? Number
Complete the row of the table indicating the economic life for this project
NOTE: Use 5 significant figures in your calculations, and round your answers for the table below to the nearest dollar.
Year
Number
Salvage
Number
Maintenance
Number
EAC
Capital
Number
EAC
Maintenance
Number
EAC
Total
Number
A dozer costs $145,000 to purchase and has a useful life of 6 years with a salvage
value of $15,000. Assume that MARR is 11%. How much should the company charge
per hour to recover the cost of the investment if the dozer will operate 1,200
hours/year.
Chapter 17 Solutions
Construction Accounting And Financial Management (4th Edition)
Ch. 17 - What is the do nothing alternative?Ch. 17 - Why is it important to compare all possible...Ch. 17 - What is a sunk cost? How should sunk costs be...Ch. 17 - Prob. 4DQCh. 17 - Prob. 5DQCh. 17 - What is a study period? Why must all of the...Ch. 17 - Why do the NPV, the future worth, and the annual...Ch. 17 - Why must you use mutually exclusive alternatives...Ch. 17 - Why would one use the capital recovery with return...Ch. 17 - What are the weaknesses of the payback period...
Ch. 17 - What types of investments does the payback period...Ch. 17 - What is the advantage of using the project balance...Ch. 17 - A manager has up to 190.000 available to invest in...Ch. 17 - A manager has up to 200,000 available to invest in...Ch. 17 - Determine the MARR for a company that can borrow...Ch. 17 - Determine the MARR for a company that can invest...Ch. 17 - Your company is looking at purchasing a dump truck...Ch. 17 - Your company is looking at purchasing a loader at...Ch. 17 - Your company needs to purchase a new track hoe and...Ch. 17 - Your company needs to purchase a new track hoe and...Ch. 17 - Your company needs to purchase a track hoe and has...Ch. 17 - Your company needs to purchase a truck and has...Ch. 17 - Prob. 23PCh. 17 - Determine the incremental net present value for...Ch. 17 - Determine the future worth for Problem 17. Should...Ch. 17 - Determine the future worth for Problem 18. Should...Ch. 17 - Prob. 27PCh. 17 - Determine the annual equivalent for Problem 18....Ch. 17 - Determine the rate of return for Problem 17....Ch. 17 - Determine the rate of return for Problem 18....Ch. 17 - Your company has 100,000 to invest and has...Ch. 17 - Your company has 200,000 to invest and has...Ch. 17 - Determine the incremental rate of return for...Ch. 17 - Prob. 34PCh. 17 - Your company has purchased a new track hoe for...Ch. 17 - Your company has purchased a new excavator for...Ch. 17 - Determine the payback period without interest for...Ch. 17 - Determine the payback period without interest for...Ch. 17 - Prob. 39PCh. 17 - Determine the payback period with interest for...Ch. 17 - Draw a project balance chart for Problem 17.Ch. 17 - Draw a project balance chart for Problem 18.
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