Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 7, Problem 47P
AMT, Inc., is considering the purchase of a digital camera for maintenance of design specifications by feeding digital pictures directly into an engineering workstation where computer-aided design files can be superimposed over the digital pictures. Differences between the two images can be noted, and corrections, as appropriate, can then be made by design engineers. (7.12)
- a. You have been asked by management to determine the PW of the EVA of this equipment, assuming the following estimates; capital investment = $345,000; market value at end of year six = $120,000; annual revenues = $120,000; annual expenses = $8,000; equipment life = 6 years; effective income tax rate = 32%; and after-tax MARR = 10% per year. MACRS
depreciation will be used with a five-year recovery period. - b. Compute the PW of the equipment’s ATCFs. Is your answer in Part (a) the same as your answer in Part (b)?
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
A young engineer is considering establishing his own company. An investment pfP500,000 will be required, which will be recovered in 15 ears. It is estimated that sales will be P800,000 per year and the operating expenses will be as follows: Materials P160.000 per year Labor P280.000 per vear Overhead P40.000 + 10% of sales per year Selling expenses P60,000 per year The engineer will give up his regular job paying P216,000 per year and devote full time to the operation of the business; this will result in decreasing labor cost by P40,000 per year, material cost by P28,000 per year, and overhead cost by P32,000 per year. If the engineer expects to earn at least 20% of his capital, should he invest? (Use ROR method for your solution)
Jane Livingston, an industrial engineer at Energy Conservation Service, hasfound that the anticipated profitability of a newly developed water-heaterthe temperature-control device can be measured by net present worth as PW = 5.63V(4.3X - $15) - 33,580 where Vis the number of units produced and sold and X is the sales price per unit. She also found that the V parameter value could occur anywhere in the range of 1,500 to 5,000 units and the X parameter value anywhere between $10 and $35 per unit. Develop a sensitivity graph as a function of the number of units produced and sales price per unit.
Subject - account
Please help me.
Thankyou.
Chapter 7 Solutions
Engineering Economy (17th Edition)
Ch. 7 - How are depreciation deductions different from...Ch. 7 - Prob. 2PCh. 7 - Explain the difference between real and personal...Ch. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10P
Ch. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - A manufacturer of aerospace products purchased...Ch. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Prob. 19PCh. 7 - Prob. 20PCh. 7 - Prob. 21PCh. 7 - Prob. 22PCh. 7 - Prob. 23PCh. 7 - Prob. 24PCh. 7 - Prob. 25PCh. 7 - Prob. 26PCh. 7 - Prob. 27PCh. 7 - Prob. 28PCh. 7 - Prob. 29PCh. 7 - Prob. 30PCh. 7 - Prob. 31PCh. 7 - Prob. 32PCh. 7 - Prob. 33PCh. 7 - Refer to Problem 6-79. The alternatives all have a...Ch. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Prob. 39PCh. 7 - Prob. 40PCh. 7 - Prob. 41PCh. 7 - Prob. 42PCh. 7 - Prob. 43PCh. 7 - Prob. 44PCh. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - AMT, Inc., is considering the purchase of a...Ch. 7 - Prob. 48PCh. 7 - Prob. 49PCh. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Determine the after-tax yield (i.e., IRR on the...Ch. 7 - A 529-state-approved Individual Retirement Account...Ch. 7 - Prob. 55PCh. 7 - Prob. 56PCh. 7 - Prob. 57SECh. 7 - Prob. 58SECh. 7 - Prob. 59SECh. 7 - Refer to the chapter opener and Example 7-14. As...Ch. 7 - Prob. 61FECh. 7 - The Parkview Hospital is considering the purchase...Ch. 7 - Prob. 63FECh. 7 - Prob. 64FECh. 7 - Prob. 65FECh. 7 - Prob. 66FECh. 7 - Prob. 67FECh. 7 - Prob. 68FECh. 7 - Prob. 69FECh. 7 - Prob. 70FECh. 7 - Prob. 71FECh. 7 - Prob. 72FECh. 7 - Prob. 73FECh. 7 - Prob. 74FECh. 7 - Prob. 75FECh. 7 - If the federal income tax rate is 35% and the...Ch. 7 - Prob. 77FECh. 7 - Acme Manufacturing makes their preliminary...Ch. 7 - Prob. 79FECh. 7 - Prob. 80FECh. 7 - Prob. 81FECh. 7 - Prob. 82FECh. 7 - Prob. 83FECh. 7 - Prob. 84FECh. 7 - Two insulation thickness alternatives have been...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- A steam generation system at a biomass-fueled power plant uses an electrostaticprecipitator (ESP) to clean its gaseous effluents. The power plant has consistently made use ofthe same type of ESP over the past several years. The installed cost of a new ESP has beenrelatively constant at $100,000. Records of operation and maintenance expenses indicate thefollowing average expenses per year as a function of the age of the ESP. The MVs of the ESP arealso reasonably well known as a function of age. Data graph in image attached. Determine the best time to replace the ESP if the MARR is 15% per year.arrow_forwardBig Bro manufacturing company purchased a delivery van having a cost of P900 000.00, a life of eight years and a salvage value of P75 000. Estimated maintenance cost is P20 000.00 per year with a major overhaul costing P80 000 required at the end of four years. Using a 14% MARR, find the annual cost of the van? (Ans. - P218 556.05)-PLEASE USE AN ACTUAL FORMULA NOT AN EXCELarrow_forwardHow do you calculate the PVIFA for the equation: EAC = NPV / Annutiy factor How would you use the financial calculator to solve for EAC and PVIFA? You are evaluating two different silicon wafer milling machines. The Techron I costs $270,000, has a three-year life, and has pre-tax operating costs of $69,000 per year. The Techron II costs $475,000, has a five-year life, and has pre-tax operating costs of $36,000 per year. Both milling machines are in Class 8 (CCA rate of 20 percent per year). Assume a salvage value of $45,000. If your tax rate is 35 percent and your discount rate is 10 percent, compute the EAC for both machines. Which do you prefer? Why?arrow_forward
- A carton packaging manufacturer considers 2 alternative machines in its production process, namely automatic machines and semi-automatic machines. The price of the automatic machine is Rp. 23 billion with an estimated salvage value of Rp. 4M after 10 years. If an automatic machine is selected, an operational cost of Rp. 12 million per hour and a maintenance fee of IDR 3.5 billion per year. While the engine output is 8 tons per hour. Semi-automatic machines can be purchased for Rp. 8M with an estimated useful life of 5 years, without salvage value. If a semi-automatic machine is selected, an operational cost of Rp. 24 million per hour and a maintenance fee of Rp. 1.5M per year. While the engine output is 6 tons per hour. Question :If the MARR used is 10%, calculate:a. How many tons of product must be produced each year so that automatic machines are more economical than semi-automatic machines? b. If the company decides to produce 1,500 tonnes per year, which machine should it choose?arrow_forwardPlease provide answer in 1 hr I will upvotearrow_forward11-8. The Ford Motor Company is considering three mutually exclusive electronic stability control systems for protection against rollover of its automobiles. The investment (study) period is four years, and MARR is 12% per year. Data for the fixture costs of the systems are as follows. Alternatives В Annual savings MV (after 4 years) Capital investment $12,000 $15,800 $8,000 $4,000 $5,200 $3,000 $3,500 $1,500 $3,000 IRR 19.2% 18% 23% Plot the AW of each alternative against MARR as the MARR varies across this range: 4%, 8%, 12%, 16%, and 20%. What can you generalize about the range of the MARR for which each alternative is preferred? (11.2)arrow_forward
- In a $ 80,000 investment project, it is estimated that annual after-tax net cash flows of $ 20,000 will be received over 5 years. Estimate the range of the Internal Rate of Return for this project Here are the options: - It has no IRR - [0,5%) - Greater than 10% - [5%,10%)arrow_forwarduse excel to solve 11.02-PR002 You have been asked to perform a sensitivity analysis on a company's plan to modemize its facilities to determine the impact of possible errors in estimating the net annual savings. The initial investment in the modemnization is $30,000. The expected net annual savings are $13,000. The salvage value is $7,000 after a planning horizon of 7 years. MARR is 12% per year. Determine if the modernization is economically attractive based on the initial estimates and an annual worth (AW) analysis. Determine the AW if the net annual savings change by the following percentages from the initial estimate: -80%, -60%, -40%, -20 %, +20%, +40%. Determine the percentage change in net annual savings that causes a reversal in the decision regarding the attractiveness of the project.arrow_forwardProblem 1a: An electronics manufacturing company is considering the replacement of its main soldering machine (Defender) with a new and more efficient model (Challenger). The possible salvage values of the Defender machine, if sold in one of the years 0 to 5, and the maintenance costs for retaining the existing machine over its remaining useful life are given in the table below. Assume year O is the base year. • Notice the Defender salvage values decline at a constant rate of -18%/year (a declining geometric gradient) and the maintenance costs increase at a constant rate of 20%/year as the defender is retained from year to year. • The new replacement machine can be purchased now for $45,000. The salvage value if sold in years 1 to 8 and maintenance costs for switching over to the new machine are also given in the table below. Notice the Challenger salvage values decline at a constant rate of -10%/year (a declining geometric gradient) and the maintenance costs increase at a constant…arrow_forward
- PEFORMING ROR ANALYSIS FOR 3D PRINTER AND IIOT TECHNOLOGY Background Software used in 3D printer systems manufactured by Spectrum LASER Corp. is currently able to automatically develop hollows, shells, and "tree supports to save development time. Network printing for use on multiple machines and at different locations globally is available. New software, called JIT II, is being beta tested that will allow lloT-type (Industrial Internet of Things) connections between machines at distant locations. When onb oard monitoring sensors detect that a part is about to fail, or it is time to replace one of several high-profile parts, the JIT Il software will automatically queue the part's manufacturing code onto a 3D printer that is detected to be locally idle or ready. The company believes it can design and produce the JIT Il software, the 3D printers, and the accompanying computer equipment necessary to place this technology in a wide variety of harsh environments-chemically toxic to humans,…arrow_forwardA machine used for cutting materials in a factory has the following outputs perhour at various speeds and required periodic tool regrinding at the intervals cited .Speed Output per hour Tool regrinding A 200 pieces Every 8 hours B 280 pieces Every 5 hours A set of tools costs P560 and can be ground twenty times. Each regrinding costs P54.00 and the time needed to regrind and change tools is 1 hour. The machine operator is paid P35.00 per hour including the time the tool is changed. The tool grinder who also sets the tools to the machine is paid P40.00 per hour. The hourly rate chargeable against the machine is P38.00, regardless of machine speed. Which speed is more economical? Speed B, PO.096/pc Speed B. PO.087/pc Speed A, P.054/pc Speed A, P.037/pcarrow_forwardAt 20% cpd. monthly., find the capitalized cost of a bridge whose cost is P673777 with a life of 22 years, if the bridge must be rehabilitated at a cost of P218341 at the end of each 22 years.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education
Difference between Renewable and Nonrenewable Resources; Author: MooMooMath and Science;https://www.youtube.com/watch?v=PLBK1ux5b7U;License: Standard Youtube License