ENGR.ECONOMIC ANALYSIS W/DASHBOARD
ENGR.ECONOMIC ANALYSIS W/DASHBOARD
14th Edition
ISBN: 9780190063467
Author: NEWNAN
Publisher: OXF
Question
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Chapter D, Problem 76P
To determine

The minimum salvage value as a percentage of first cost.

Expert Solution & Answer
Check Mark

Answer to Problem 76P

Therefore the correction option is (b)36%.

Explanation of Solution

Given data:

Cost of the tank is $150,000.

Salvage value is $7,500.

Time period is 10years.

Annual repair cost for every 2 year is $30,000.

Cost of the new tank is $325,000.

Interest rate is 12%.

Number of years is 20.

Concept used:

Write the expression to calculate the salvage value of the technology.

SV=[(cost)( 1 stcost)( 1 ( 1+i) n)( 2 ndcost)( 1 ( 1+i) n)( 3 rdcost)( 1 ( 1+i) n)( 4 thcost)( 1 ( 1+i) n)+salvagevalue( 1 ( 1+i) n)+costtechnology] ...... (I)

Here, salvage value is SV, interest rate is i, and time period is n.

Calculation:

Calculate the salvage value for the technology,

Substitute, $150,000 for cost, $30,000 for 1st cost, $30,000 for 2nd cost, $30,000 for 3rd cost, $7,500 for 4th cost, 12% for i and in increments of 2 for n in Equation (I).

SV=[( $150,000)( $30,000)( 1 ( 1+0.12) 2)( $30,000)( 1 ( 1+0.12) 4)( $30,000)( 1 ( 1+0.12) 6)( $30,000)( 1 ( 1+0.12) 8)( $7,500)( 1 ( 1+0.12) 10)+$325,000]=[( $150,000)( $30,000)( 0.7972)( $30,000)( 0.6355)( $30,000)( 0.5066)( $30,000)( 0.4038)( $7,500)( 0.3222)+$325,000]=[$150,000$23,916$19,065$15,198$12,114$2,416.5+$325,000]=$102,290.5

Write the expression to calculate percentage to the first cost.

PC=SalvagevaluetechnologyCosttechnology×100 ....... (II)

Substitute, $102,290.5 for salvage value and $325,000 for cost in Equation (II)

PC=$102,290.5$325,000×100=32%.

Conclusion:

The nearest value to the answer is 36%.

Therefore, the correction option is (b)36%.

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Chapter D Solutions

ENGR.ECONOMIC ANALYSIS W/DASHBOARD

Ch. D - Prob. 11PCh. D - Prob. 12PCh. D - Prob. 13PCh. D - Prob. 14PCh. D - Prob. 15PCh. D - Prob. 16PCh. D - Prob. 17PCh. D - Prob. 18PCh. D - Prob. 19PCh. D - Prob. 20PCh. D - Prob. 21PCh. D - Prob. 22PCh. D - Prob. 23PCh. D - Prob. 24PCh. D - Prob. 25PCh. D - Prob. 26PCh. D - Prob. 27PCh. D - Prob. 28PCh. D - Prob. 29PCh. D - Prob. 30PCh. D - Prob. 31PCh. D - Prob. 32PCh. D - Prob. 33PCh. D - Prob. 34PCh. D - Prob. 35PCh. D - Prob. 36PCh. D - Prob. 37PCh. D - Prob. 38PCh. D - Prob. 39PCh. D - Prob. 40PCh. D - Prob. 41PCh. D - Prob. 42PCh. D - Prob. 43PCh. D - Prob. 44PCh. D - Prob. 45PCh. D - Prob. 46PCh. D - Prob. 47PCh. D - Prob. 48PCh. D - Prob. 49PCh. D - Prob. 50PCh. D - Prob. 51PCh. D - Prob. 52PCh. D - Prob. 53PCh. D - Prob. 54PCh. D - Prob. 55PCh. D - Prob. 56PCh. D - Prob. 57PCh. D - Prob. 58PCh. D - Prob. 59PCh. D - Prob. 60PCh. D - Prob. 61PCh. D - Prob. 62PCh. D - Prob. 63PCh. D - Prob. 64PCh. D - Prob. 65PCh. D - Prob. 66PCh. D - Prob. 67PCh. D - Prob. 68PCh. D - Prob. 69PCh. D - Prob. 70PCh. D - Prob. 71PCh. D - Prob. 72PCh. D - Prob. 73PCh. D - Prob. 74PCh. D - Prob. 75PCh. D - Prob. 76PCh. D - Prob. 77PCh. D - Prob. 78PCh. D - Prob. 79PCh. D - Prob. 80PCh. D - Prob. 81PCh. D - Prob. 82PCh. D - Prob. 83PCh. D - Prob. 84PCh. D - Prob. 85PCh. D - Prob. 86PCh. D - Prob. 87PCh. D - Prob. 88PCh. D - Prob. 89PCh. D - Prob. 90PCh. D - Prob. 91PCh. D - Prob. 92PCh. D - Prob. 93PCh. D - Prob. 94PCh. D - Prob. 95PCh. D - Prob. 96PCh. D - Prob. 97PCh. D - Prob. 98PCh. D - Prob. 99PCh. D - Prob. 100PCh. D - Prob. 101PCh. D - Prob. 102PCh. D - Prob. 103PCh. D - Prob. 104PCh. D - Prob. 105PCh. D - Prob. 106PCh. D - Prob. 107PCh. D - Prob. 108PCh. D - Prob. 109PCh. D - Prob. 110PCh. D - Prob. 111PCh. D - Prob. 112PCh. D - Prob. 113PCh. D - Prob. 114PCh. D - Prob. 115PCh. D - Prob. 116PCh. D - Prob. 117PCh. D - Prob. 118PCh. D - Prob. 119PCh. D - Prob. 120PCh. D - Prob. 121PCh. D - Prob. 122PCh. D - Prob. 123PCh. D - Prob. 124PCh. D - Prob. 125PCh. D - Prob. 126PCh. D - Prob. 127PCh. D - Prob. 128PCh. D - Prob. 129PCh. D - Prob. 130PCh. D - Prob. 131PCh. D - Prob. 132PCh. D - Prob. 133PCh. D - Prob. 134PCh. D - Prob. 135PCh. D - Prob. 136PCh. D - Prob. 137PCh. D - Prob. 138PCh. D - Prob. 139P
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