1. Consider the following alternatives: First cost 5000 10,000 Annual Maintenance 500 200 End-of-useful-life salvage value 600 1000 Useful life 5 years 15 years Based on an 8% interest rate, which alternative should be selected? Use: a) Rate of return Analysis b) Future Worth analysis.
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- Compare the following alternatives based on the rate of return analysis assuming that the MAAR is 15% per year. Project A Project B Initial Cost $60.000 $90.000 Annual cost of operation 15.000 8.000 Annual cost of reparation 5.000 2.000 Annual increase of the repair 1.000 1.500 Salvage value 8.000 12.000 Life, years 15 15Compare the following alternatives based on the equivalent uniform annual value analysis, using a 15% annual interest rate with continuous capitalization. Alternative A Alternative B Initial Cost $18000 $25000 Annual Cost $4000 $3600 Salvage Value $3000 $2500 Life (years) 3 4Two alternatives are being considered for installation. Which should be selected based on an interest rate of 5.6% per year ? Alternative A Alternative B First Cost, $ 135,000 462,000 Annual Operating Cost, $/yr 76,000 34,600 Salvage value, $ 71,200 n/a Life, years 9 ∞
- Three mutually exclusive projects are being considered.First cost 2000 3000 4000uniform annual benefit 200 300 0salvage value 1000 2700 5600useful life in years 5 6 7when each project reached the end of its useful life, it would be sold for its salvage value and there would be no replacement. if 8% is the desired rate of return, which project should be selected? use future worth analysis.A firm is considering three mutually exclusive alternatives as a part of an upgrade to an existing transportation network. If the MARR is 10% per year, which alternative(if any) should be chosen using the IRR analysis procedure? Use trial & error and show your calculations. A B C Initial Cost 40000 30000 20000 Annual Revenue 10400 8560 7750 Annual Cost 4000 3000 2500 Salvage Value 3000 2500 2000 Useful Life 20 20 10Compare the alternatives C and D on the basis of a present worth analysis using an interest rate of 10% per year and a study period of 10 years. Alternative C D First cost, $ −40,000 −32,000 AOC, $/year −7,000 −3,000 Annual increase in operating cost, $/year −1,000 — Salvage value, $ 9,000 500 Life, years 10 5
- Compare two alternatives, A and B, on the basis of a present worth evaluation using i = 10% per year and a study period of 8 years. Alternative A B First cost, $ −15,000 −28,000 Annual operating cost, $/year −6,000 −9,000 Overhaul in year 4, $ — −2000 Salvage value, $ 3,000 5,000 Life, years 4 8Alternative X has a first cost of 19000 an annual operating cost of 3500 , and a salvage value of 5325 after 18 year. Alternative Y has a first cost of 20000 an annual operating cost of 3600 , and a salvage value of 7800 after 18 year. If MARR of 18% per year, approximately what is the PW of each alternative?Pina Colada, Inc. is considering purchasing equipment costing $42000 with a 6-year useful life. The equipment will provide annual cost savings of $12000 and will be depreciated straight-line over its useful life with no salvage value. Pina Colada requires a 10% rate of return. Present Value of an Annuity of 1 Period 8% 9% 10% 11% 12% 15% 6 4.623 4.486 4.355 4.231 4.111 3.784 What is the approximate net present value of this investment? A. $30000 B. $11832 C. $8772 D. $10260
- Three machines are being considered for purchase. If the interest rate is 10%, which machine should be bought? a) Select the best alternative using annual worth analysis. b) Select the best alternative using present worth analysis. A B CInitial cost 150000 210000 300000 Annual operating cost 20000 15000 8000 Repairs will have to be made every 5 years 20000 50000 38000 Salvage value 40000 60000 80000 Useful life 10 years 15 years 20 years5. A mechanical engineer is considering two machines for a lathe. Machine A will have an initial cost of $82,000, annual maintenance and operating (M&O) costs of $32,000, and a salvage value of $60,000. Machine B will have an initial cost of $97,000, annual M&O costs of $27,000, and a salvage value of $30,000. Which alternative should be chosen based on a comparison of future value with an interest rate of 15% per year? Use a 3 year study period A. Machine A B. B machine C. Both alternatives are equally profitable D. There is no economically feasible solution if the alternatives are mutually exclusive Please solve based the option max 20 minutes ASAPColaw Company is considering buying equipment for $240,000 with a useful life of five years and an estimated salvage value of $12,000. If annual expected income is $21,000, the denominator in computing the annual rate of return is Group of answer choices $120,000. $252,000. $240,000. $126,000.