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 6, Problem 42P
To determine

Calculate the net annual benefit.

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Huntington Medical Center purchased a used low-field MRI scanner 2 years ago for $445,000. Its operating cost is $375,000 per year and it can be sold for $135,000 anytime in the next 3 years. The Center’s director is considering replacing the presently owned MRI scanner with a state-of-the-art 3 Tesla machine that will cost $2 million.The operating cost of the new machine will be $260,000 per year, but it will generate extra revenue that is expected to amount to $675,000 per year. The new unit can probably be sold for $775,000 3 years from now. You have been asked to determine how much the presently owned scanner would have to be worth on the open market for the AW values of the two machines to be the same over a 3-year planning period. The Center’s MARR is 9% per year.   The presently owned scanner should be worth $  on the open market.
Huntington Medical Center purchased a used low-field MRI scanner 2 years ago for $445,000. Its operating cost is $400,000 per year and it can be sold for $140,000 anytime in the next 3 years. The Center’s director is considering replacing the presently owned MRI scanner with a state-of-the-art 3 Tesla machine that will cost $2.5 million.The operating cost of the new machine will be $280,000 per year, but it will generate extra revenue that is expected to amount to $700,000 per year. The new unit can probably be sold for $750,000 3 years from now. You have been asked to determine how much the presently owned scanner would have to be worth on the open market for the AW values of the two machines to be the same over a 3-year planning period. The Center’s MARR is 10% per year. The presently owned scanner should be worth $ on the open market. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up…
A subsidiary of a major furniture company manufactures wooden pallets. The plant has the capacity to produce 300,000 pallets per year. Presently the plant is operating at 70% of capacity. The selling price of the pallets is $18.25 per pallet and the variable cost per pallet is $15.75. At zero output, the subsidiary plant’s annual fixed costs are $550,000. This amount remains constant for any production rate between zero and plant capacity. Solve, a. With the present 70% of capacity production, what is the expected annualprofit or loss for the subsidiary plant. b. What annual volume of sales (units) is required in order for the plant to break even? c. What would be the annual profit or loss if the plant were operating at 90% of capacity? d. If fixed costs could be reduced by 40%, what would be the new breakeven sales volume?
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