AUTOMOTIVE TECHNOLOGY TECH MANUAL
AUTOMOTIVE TECHNOLOGY TECH MANUAL
7th Edition
ISBN: 9781337794220
Author: ERJAVEC
Publisher: CENGAGE L
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Chapter 44, Problem 3SA

What is the purpose of the interaxle differential?

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The initial cost of a proposed heat recovery system is $375,000. The annual operation andmaintenance costs are projected to be $12,000. The salvage value of the system at the end of itsuseful life (projected to be 30 years) is $60,000. The annual savings in fuel costs resulting fromthis system are estimated to be $55,000 per year.a. Assuming annual compounding, determine the rate of return for this heat recovery system.b. If management has set the MARR to be 15% for a heat recovery system like this, what is themaximum initial cost that can be spent on the system (assuming that all other costs and incomesare the same)?
The initial cost of a machine for a production facility is $225,000. The machine is expected tolast for 10 years with no salvage value. The company’s tax rate is 49% and SLD is used todepreciate the machine. For this type of depreciation, the tax life of the machine is considered 8years and its salvage value is $5,000. The after-tax rate of return is 14.3%. Determine the uniformannual before-tax cash flow.
Three alternatives are being considered for an air cleaning system. All three systems have a lifeof 10 years with no salvage value. System A has an initial cost of $29,000. During the first fiveyears of operation, the annual costs to operate system A are $5,000. During the second five years,the annual cost of system A increases to $16,000. System B has an initial cost of $43,000. Theannual cost to operate system B is $4,000, however, after the first year, this cost increases by$1,600 per year. System C has an initial cost of $58,000 with an annual cost of $2,400. System Crequires two upgrades: one during year 4 which costs $6,000, and the other during year 8 whichcosts $3,000. The MARR for this project is 17%. Determine which air cleaning system should beinstalled based on an economic analysis.
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