Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 6, Problem 49P
To determine
Calculate the annual expense.
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Lang Industrial Systems Company (LISC) is trying to decide between two different
conveyor belt systems. System A costs $252,000, has a four-year life, and requires
$78,000 in pretax annual operating costs. System B costs $354,000, has a six-year life,
and requires $72,000 in pretax annual operating costs. Suppose LISC always needs a
conveyor belt system; when one wears out, it must be replaced. Assume the tax rate is
34 percent and the discount rate is 8 percent.
Calculate the EAC for both conveyor belt systems. (Negative amounts should be
indicated by a minus sign. Do not round intermediate calculations and round your
answers to 2 decimal places, e.g., 32.16.)
System A
System B
EAC
127564.C
Which conveyor belt system should the firm choose?
• System B
○ System A
Covington Corporation purchased a vibratory finishing machine for $20,000 in year 0. The useful life of the machine is 10 years, at the end of which the machine
is estimated to have a salvage value of zero. The machine generates net annual revenues of $6,000. The annual operating and maintenance expenses are
estimated to be $800. If Covington's
MARR is 16%, how many years will it take before this machine becomes profitable? Assume that the cash flows occur continuously throughout the year.
It will take years before this machine becomes profitable. (Round to one decimal place.)
An electric automobile can be purchased for $25,000. The automobile is estimated to have a life of 12 years with annual mileage of20,000 miles. Every three years, a new set of batteries will have to be purchased at a cost of $3,000. The $3,000 cost of the batteries is a net value with the old batteries traded in for the new ones. Annual maintenance of the vehicle is estimated to cost $700. The cost of recharging the batteries is estimated at $0.015 per mile. The salvage value of the batteries and the vehicle at the end of 12 years is estimated at $2,000. Consider the MARR to be 7%. What is the cost per mile to own and operate this vehicle according to these estimates?
Chapter 6 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Consider the cash flows in Table P6.7 for the...Ch. 6 - Prob. 8PCh. 6 - Prob. 9PCh. 6 - The repeating cash flows for a certain project are...
Ch. 6 - Beginning next year, a foundation will support an...Ch. 6 - Prob. 12PCh. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - Prob. 17PCh. 6 - Prob. 18PCh. 6 - The Geo-Star Manufacturing Company is considering...Ch. 6 - Prob. 20PCh. 6 - Prob. 21PCh. 6 - Prob. 22PCh. 6 - Prob. 23PCh. 6 - Prob. 24PCh. 6 - Prob. 25PCh. 6 - Prob. 26PCh. 6 - Prob. 27PCh. 6 - Prob. 28PCh. 6 - Prob. 29PCh. 6 - Prob. 30PCh. 6 - Prob. 31PCh. 6 - Prob. 32PCh. 6 - Prob. 33PCh. 6 - Prob. 34PCh. 6 - Prob. 35PCh. 6 - Prob. 36PCh. 6 - Prob. 37PCh. 6 - Prob. 38PCh. 6 - Prob. 39PCh. 6 - Prob. 40PCh. 6 - Prob. 41PCh. 6 - Prob. 42PCh. 6 - Prob. 43PCh. 6 - Prob. 44PCh. 6 - Prob. 45PCh. 6 - Prob. 46PCh. 6 - Prob. 47PCh. 6 - Prob. 48PCh. 6 - Prob. 49PCh. 6 - Prob. 50PCh. 6 - Prob. 51PCh. 6 - Prob. 52PCh. 6 - Prob. 53PCh. 6 - Prob. 1STCh. 6 - Prob. 2STCh. 6 - Prob. 3STCh. 6 - Prob. 4ST
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