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
Question
Chapter 9, Problem 18P
(a):
To determine
Calculate the economic life.
(b):
To determine
Replacement of the defender.
(c):
To determine
Assumption.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
$250,000 is invested in equipment having a salvage value equal to $250,000(0.80n) after n years of use. O&M costs equal $60,000 the first year and increase $8,000 per year. Based on a MARR of 10%, what are the optimum replacement interval and minimum EUAC?
An $80,000 baling machine for recycled paper was purchased by the XYZ company two years ago. The current MV of the machine is $50,000, and it can be kept in service for seven more years. MARR is 12% per year and the projected net annual receipts (revenues less expenses) and end-of-year market values for the machine are shown below. When is the best time for the company to abandon this project?
END OF YEAR
1 2 3 4 5 6 7
Net annual receipts $20,000 $20,000 $18,000 $15,000 $12,000 $6,000 $3,000
Market value 40,000 32,000 25,000 20,000 15,000 10,000 5,000
Anew forklift truck will require an investment of $30,000 and is expectedto have end-of-year market values and annual expenses as shown in the Table below.If MARR (before tax) is 10% per year, Önd the Economic Service Life of the truck.Market Value Annual ExpensesEnd of year at end of year during year1 $22,500 $3,0002 $16,875 $4,5003 $12,750 $7,0004 $9,750 $10,0005 $7,125 $13,000
please dont use excell
Chapter 9 Solutions
Engineering Economy (17th Edition)
Ch. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4PCh. 9 - Prob. 5PCh. 9 - Prob. 6PCh. 9 - Prob. 7PCh. 9 - A city water and waste-water department has a...Ch. 9 - Prob. 9PCh. 9 - Prob. 10P
Ch. 9 - Prob. 11PCh. 9 - Prob. 12PCh. 9 - Use the PW method to select the better of the...Ch. 9 - Prob. 14PCh. 9 - Prob. 15PCh. 9 - Prob. 16PCh. 9 - Prob. 17PCh. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 21PCh. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Prob. 25PCh. 9 - Prob. 26PCh. 9 - Prob. 27SECh. 9 - Prob. 28SECh. 9 - Prob. 29CSCh. 9 - Prob. 30CSCh. 9 - Prob. 31CSCh. 9 - Prob. 32FECh. 9 - Prob. 33FECh. 9 - Prob. 34FECh. 9 - Prob. 35FECh. 9 - Prob. 36FE
Knowledge Booster
Similar questions
- : A machine was purchased and installed 6 years ago for $50000 with a useful life of 10 years. The salvage value is now $5500 and decreasing at a rate of $500 per year. The machine has a maintenance cost of $2000 per year. Assuming a 12.4% MARR, should the company replace the machine this year with a potential new machine that has a EUAC of $3000 per year? (show your work)arrow_forwardPeachtree Construction Company, a highway contractor, is considering the purchase of a new trench excavator that costs 300000 and can dig a 3-foot-wide trench at the rate of 16 feet per hour. The contractor gets paid according to the usage of the equipment, 100 per hour. The expected average annual usage is 500 hours, and maintenance and operating costs will be 10 per hour. The contractor will depreciate the equipment by using a five-year MACRS, units-of-production method. At the end of five years, the excavator will be sold for 100000. Assuming the contractor’s marginal tax rate is 25% per year, determine the annual after-tax cash flow. In excel.arrow_forwardK An old forklift is due for a replacement analysis. It has a current market value $10,000. The market values and operation and maintenance costs for each of the remaining years of service are given below. The MARR is 17% per year. (a) Complete the table of marginal costs of the old forklift for each of the remaining years of service. (b) If the challenger has a minimum EUAC of $7,415, answer the two additional questions. Year 1 2 3 4 (a) Fill in the table below. (Round to the nearest dollar.) Forklift (Defender) MV at EOY Year 1 2 3 4 $6,000 5,000 4,000 2,000 Click the icon to view the interest and annuity table for discrete compounding when MARR = 17% per year. O&M Costs $4,000 4,000 4,500 5,500 Marginal Cost $ $ SA SA $arrow_forward
- Kappa Holdings is looking at a new system with an installed cost of $740,000. This cost will be depreciated straight-line to zero over the project's 7-year life, at the end of which the system can be salvaged for $102,000. The system will save the firm $217,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $69,000, which will be returned at the end of the project. If the tax rate is 22 percent and the discount rate is 9 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPVarrow_forwardinstall cost of the new machinery is $400,000 and is expected to last for 5 years. The salvage value is expected to be $30,000 in today’s dollars. Revenue is expected to increase by $40,000 while operating costs are expected to increase $2500 (both actual). Determine the present worth of the project, assuming an (actual) MARR of 10%, a CCA rate of 10% and a corporate tax rate of 15%.arrow_forwardAn existing robot can be kept if $2,000 is spent now to upgrade it for future service requirements. Alternatively, the company can purchase a new robot to replace the old robot. The following estimates have been developed for both the defender and challenger. The company?s before-tax MARR is 20% per year. Based on this information, should the existing robot be replaced right now? Assume the robot will be needed for an indefinite period of time. (Hint: Use the AW method)arrow_forward
- The replacement of a planning machine is being considered by the Reardorn Furniture Company. (There is an indefinite future need for this type of machine.) The best challenger will cost $30,000 for installation and will have an estimated economic life of 11 years and a $2,000 MV at that time. It is estimated that annual expenses will average $15,500 per year. The defender has a present BV of $6,000 and a present MV of $3500. Data for the defender for the next three years are given below. Using a before-tax interest rate of 10% per year, make a comparison to determine whether it is economical to make the replacement now. Year MV at End of BV at End of Expenses during Year Year the Year $18,000 25,000 S- 1,500 $4,500 2 - 1,750 3,000 3 -2,000 1,500 32,000 Click the icon to view the interest and annuity table for discrete compounding when i 10% per year. Fil in the table for the EUAC values for the defender for years 1-3. (Round to the nearest dollar.) Year EUAC $25350 $24755 3 $ 25758arrow_forwardThe replacement of a planning machine is being considered by the Reardorn Furniture Company. (There is an indefinite future need for this type of machine.) The best challenger will cost $32,000 for installation and will have an estimated economic life of 11 years and a $1,800 MV at that time. It is estimated that annual expenses will average $16,000 per year. The defender has a present BV of $6,000 and a present MV of $3500. Data for the defender for the next three years are given below. Using a before-tax interest rate of 12% per year, make a comparison to determine whether it is economical to make the replacement now. MV at End of BV at End of Expenses during Year Year the Year $ - 1,500 $4,500 $18,000 - 2,000 3,000 1 2 22,000 3 - 2,500 1,500 26,000 Click the icon to view the interest and annuity table for discrete compounding when i = 12% per year. Year Fill in the table for the EUAC values for the defender for years 1-3. (Round to the nearest dollar.) Year 1 2 3 EUAC $ $ SAarrow_forwardAn organization completes the purchase of new asset at a cost of $25,000. It has an yearly operating cost of $3,000 for delivery and installation It has a depreciable life of six (6) years at the end of which the salvage value will be $3,000 Utilizing 200% Declining Balance (DB) only, complete the table below If a returm on investment (rate of return) of 10% is requred, what is the minimum annual saving in needed? If the service life is decreased from six (6) years to five (5) years, what is the minimum annual savings for the firm to acheive a 10% return on investment? If the annual operating cost increase by 109%, what will be the minimum annual savings needed? Round all answers up the the nearest dollar (i.e. $2.322 = $3.00)arrow_forward
- An asset with a fixed investment cost of $90,000 is depreciated over an 8-year period. It is expected to have Sg = $30,000. MARR = 12% (My answers approximate to the nearest dollar) Using the Double DB method, what is D7? Within $10 of 5049 3365 8009 2670 4004 None of the abovearrow_forwardA commercial 3D printer is purchased for $300,000. The salvage value of the printer decreases by 40% each year that it is held. The cost to operate and maintain the machine the first year it is used is $12,500; these costs increase by $5,000 each year. What is the optimal replacement interval (in years) and minimum EUAC for the printer, assuming a MARR of 12% is used?arrow_forwardhas a cost of $53,600, lasts 9 years with no salvage value, and costs $150,000 per year in operating expenses. It is in the 3-year property class. Investment B has a cost of $84,500.00, lasts 9 years with no salvage value, and costs $125,000 per year. Investment B, however, is in the 7-year property class. The company marginal tax rate is 25%, and MARR is an after-tax 10%. Based upon the use of MACRS-GDS depreciation, compare the AW of each alternative.AWA = $enter a dollar amount AWB = $enter a dollar amount Which should be selected? What must be Investment B's cost of operating expenses for these two investments to be equivalent? $enter a dollar amountarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning