Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 22P
To determine
Replacement of the defender.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A defender was installed 10 years ago at a capital investment cost of $77,000. It presently has a market value of $15,000. If kept, the defender has an economic life of three years, operating expenses of
$13,500 per year, and a market value of $9,000 at the end of year (EOY) three. The defender is being depreciated by the straight line method using a 15-year write-off period with an estimated salvage value
for depreciation purposes of $11,000.
As an alternative, the defender can be replaced with a challenger which will cost $65,000 to install, have operating expenses of $9,500 per year, and have a final market value of $9,000 at the end of its
20-year economic life. If the replacement is made, the challenger will be depreciated with the straight line method over a 20-year life with an estimated salvage value of $9,000 at EOY 20. Such equipment
(defender or challenger) will be needed indefinitely. If the after-tax MARR is 9% per year and the effective income tax rate is 25%, should the…
Some seed cleaning equipment was purchased in 2009 for $8,500 and is depreciated by the double declining balance (DDB) method for an expected life of 12 years. What is the book value of the equipment at the end of 2014? Original salvage value was estimated to be $2,500 at the end of 12years. ANSWER WITH COMPLETE SOLUTION
1
Chapter 9 Solutions
Engineering Economy
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 new barcode reading device has an installed cost basis of $22,100 and an estimated service life of eleven years. It will have a zero salvage value at that time. The 200% declining balance method is used to depreciate this asset a. What will the depreciation charge be in year eleven? b. What is the book value at the end of year ten? c )What is the gain (or loss) on the disposal of the device if it is sold for $2,800 after ten years?arrow_forwardA distillation column is designed, purchased and installed for a cost of $4.35 million. The equipment has a depreciable life of sixteen (16) years with a final salvage value of $100,000 in year 16. For this equipment determine … a)The book value and depreciation allowance for each year using straight-line (SLN) depreciation. b)Book values and depreciation allowances for each year using double-declining (DDB) depreciationarrow_forwardA company bought a generating set (or Genset) years ago at P5M and is now fully depreciated. It plans to fix it at a cost of P2,731,809 so that it would still have 6-year life remaining and be annually operated at a cost of P1,511,338 and be sold by the end of its life at P400,000. Simultaneously, it will buy a medium-sized Genset at a cost of P2.5M to be operated at P0.25M annually, and a salvage value of P0.35M at the end of 7 years. Leasing is the 2nd option having an annual payment of P1.4M and the initial payment of P0.1M, lasting for 4 years. What is the Annual Equivalent Cost of the 1st Option when interest is 22% cpd.-annually?arrow_forward
- A new barcode reading device has an installed cost basis of $22,820 and an estimated service life of nine years. It will have a zero salvage value at that time. The 150% declining balance method is used to depreciate this asset. What is the book value at the end of year eight?arrow_forward7arrow_forwardAn industrial organization has established an automated assembly line (for $360,000) that will reduce labor costs by $56,000 each year for 10 years. The Internal Revenue Service has ruled that you must depreciate the assembly line on a Straight Line (SL) basis with a depreciable life of 10 years. After-tax MARR is 10% per year. The effective income tax rate is 25%. After 10 years, the machine will have zero salvage value. a) Draw a table showing Before Tax Cash Flow (BTCF) and After-Tax Cash Flow (ATCF). b) Calculate the after-tax PW and IRR. (Use interpolation method to find IRR). Is it feasible?arrow_forward
- The Boston Toy Corporation (BTC) currently uses an injection moulding machine that was purchased two years ago. This machine is being depreciated on a straight line basis towards a K5000 salvage value, and it has six years of remaining life. Its current book value is K26000, and it can be sold at K30000 at this point. BTC is offered a replacement machine which has a cost of K80000, an estimated useful life of six years, and an estimated salvage value of K8000. The replacement machine would permit an output expansion, so that sales would rise by K10 000 per year, even so, the new machine with much greater efficiency would still cause operating expenses to decline by K15000 per year. The new machine would require that inventories be increased by K20000 and accounts payable would simultaneously increase by K5000. BTC’s effective tax rate is 46% and its cost of capital is 15%. Required By using the Net Present Value Technique, determine whether BTC should replace the old machine.arrow_forwardA machine now in use was purchased four years ago at a cost of $30,000. It has a book value of $9,369. It can be sold for $12,000, but it could be used for three more years, at the end of which time, it would have no salvage value. What is the current amount of economic depreciation for this asset? Choose from the folowing, $12,000 $18,000 $32,000 $48,000arrow_forwardA stamping machine is classified as seven-year MACRS property. The costbasis for the machine is $120,000, and the expected salvage value is $10,000 at the end of 12 years. Compute the book value at the end of three years for tax purposes.arrow_forward
- If a certain equipment has a book value P4,863.00 during its 7th year of operation. If the annual depreciation is equal to P802.00 and it has a salvage value of P861.00, using the SLM, what is the recovery period in years?arrow_forwardAn asset costing P50,000 has a life expectancy of 6 years and an estimated salvage value of P8,000 calculate the depreciation charge at the fourth year period using declining balance methodarrow_forwardTRM company wants to buy a microfiber optic machine, If the asset has a cost basis of $50,000 with a $10,000 estimated salvage value after years, the annual depreciation using straight line depreciation method isarrow_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