Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
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Question
Chapter 9, Problem 7P
To determine
Calculate the equivalent annual value.
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A high-speed electronic assembly machine was purchased two years ago for $50,000. At the present time, it can be sold for $25,000 and replaced by a newer model having a purchase price of $42,500; or it can be kept in service for a maximum of one more year. The new assembly machine, if purchased, has a useful life of not more than two years. The projected resale values and operating and maintenance costs for the challenger and the defender are shown in the accompanying table on a year-by-year basis. The before-tax MARR is 15%.
Year
Challenger
Defender
Market Value
O&M Costs
Market Value
O&M Costs
0
$42,500
-
$25,000
-
1
31,000
$10,000
17,000
14,000
2
25,000
12,500
-
-
a. What is the total marginal cost of the challenger in EOY 1?
b. When should the machine be replaced?
c. What is the EUAC of the challenger in EOY 2?
A machine costs $19,310 and is expected to have a scrap value of $2,991 whenever it is retired. Operating and Maintenance costs are $1,047 for the first year and expected to increase by $1,751 thereafter. If the MARR is 12%, determine the minimum equivalent uniform annual cost associated with the optimal economic life of the machine. The service life of this machine is 5 years. Note: round your answer to two decimal places, and do not include spaces, currency signs,
XYZ Company purchased a machine six years ago for $350,000. Last year a replacement study was performed with
the decision to retain the machine for 2 more years. However, this year the situation has changed. The machine is
estimated to have a value of only $8,000 now and if it is to be kept in service, upgrading at a cost of $50,000 will be
necessary to make it useful for up to 2 more years. Operating cost is expected to be $10,000 the first year and $15,000
the second year, with no salvage value at all. Alternatively, the company can purchase a new machine with an ESL
of 7 years, no salvage value, and an equivalent annual cost of $ -55,540 per year. The MARR is 10% per year. Using
the estimates above, determine
a) When the company should replace the upgraded machine?
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
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