A $200,000 loan is to be repaid in equal yearlypayments over 27 years at an interest rate of 3.5%compounded annually.Question 3 Part B: How much of the 8th payment isapplied to the interest? Enter your answer in theform: 12345.67 The company you work for wants to start a newproject. The initial cost of the project is $120,000. Itis expected that revenues will be $18,000 annually.There will be annual operating expenses of $17,000.At the end of the 9-year life of the project, there is asalvage value of $25,000. Use a MARR of 5%.Perform a PW (present worth) analysis. What is thePW of the project?Question 2 Part C: Provide the PW value of theproject. Enter your answer in the form: 12345

"Since you have asked multiple questions, we will solve the first question for you. If you want any…

A $200,000 loan is to be repaid in equal yearly payments over 27 years at an interest rate of 3.5% compounded annually. Question 3 Part B: How much of the 8th payment is applied to the interest? Enter your answer in the form: 12345.67

A $200,000 loan is to be repaid in equal yearly payments over 27 years at an interest rate of 3.5% compounded annually. Question 3 Part B: How much of the 8th payment is applied to the interest? Enter your answer in the form: 12345.67

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

a company is considering the purchase of a new Lathe, where there are 3 alternative Lathes with brands D, E and F with economic value for each Lathe as follows; Lathe Machine D Lathe Machine E Lathe Machine F Initial Cost (Million Rp) 530 540 480 Maintenance Cost (MillionRp) 90 80 100 Residual Value (Million Rp) 60 130 80 Operating Life 10 10 10 Question: Do a Present Worth Analysis to be able to determine the Alternative chosen from the three Generators with MARR = 13%?
Walt Wallace Construction is investigating the purchase of a new dump truck with a 10 year useful life. Annual interest is 9%.The cash flows for two models are: Model Purchase price Annual Operating Cost Annual Income Salvage Value A $50,000 $2,000 $9,000 $10,000 B $80,000 $1,000 $12,000 $30,000 Using the present worth analysis, which truck should be purchased and why? (Show your PW numbers for each option and explain the better choice.)
Margaret has a project with a £ 28,000 first cost that returns £ 5,000 per year over its 10-year life. It has salvage value of £ 2,900 at the end of 10 years. If the MARR is 11 %, (Use 5 significant figures for your calculations, and round your answers to the nearest dollar. Indicate losses as a negative value.) (a) What is the present worth of this project? (b) What is the annual worth of this project? (c) What is the future worth of this project after 10 years?
Nelson, Inc. is considering investing in new and more efficient equipment The equipment has 10-year life with the first cost of $800,000. The annual operating cost is $40.000 in year one and increases by $20,000 per year. The salvage value expected to be $50,000 and Nelson's MARR is 10%. a Calculate the capital recovery (CR) of nonrecurring cash flows. b. Calculate the annual worth (AW) of this equipment.
1. You have been selected to prepare the following analysis of cost alternatives and select the preferred alternative. The study period is 10 years and the MARR=12% per year. A Capital Investment Annual Net- $11,000 $16,000 $20,000 600 900 1000 Revenues Salvage Value 1,000 1,300 2,000 Economic Life 10 yrs 10yrs 10yrs
2. Three mutually exclusive design alternatives are being considered. The estimated sales and cost data for each alternative are given on the next page. The MARR is 20% per year. Annual revenues are based on the number of units sold and the selling price. Annual expenses are based on fixed and variable costs. Determine which selection is preferable based on AW. State your assumptions. A в Investment cost Estimated units 60,000 20,000 $50,000 18,000 CLA to be sold/year Unit selling price, $/unit Variable costs, $/unit Annual expenses (fixed) Market value Useful life $4.40 $4.10 $1.00 $1.40 $1.15 $15,000 $30,000 $26,000 $20,000 10 years $15,000 10 years B PUBLICATIO 10 years
A potential project is currently under review. An initial investment of 87000 would be necessary for equipment. The annual revenues and expenses are expected to be 40000 and 19000 each year, respectively, over the 6-year project period. The salvage value of the equipment at the end of the project period is projected to be $17000. Assume a MARR of 9%. Find the PW (to the nearest cent).
A company is considering the purchase of a fleet of % ton pickup trucks for their contracting business. The owner is trying to decide whether to purchase the trucks with diesel or gas engines. The company specifies an intermal rate of return on equipment purchases of 6% . The owner estimates the following cash flows of costs for a gas and diesel equipped truck. What is the EUAC of the Diesel Truck? Gas Diesel Purchase Purchase Year Fuel Fuel Maintain Maintain $30,000 $250 $300 $39,000 $6,750 $5,000 $1,000 $5,000 $1,500 1 $500 $6,750 $6,750 2 3 $350 $5,000 4 $400 $6,750 $2,000 $5,000 $2,500 $5,000 $3,000 $5,000 $3,500 $5,000 $4,000 | $5,000 5 6. Note: no need to find the common useful life when using EUAC.
Who doesn't love food trucks? Imagine you are being offered to invest in a food truck as part of a restaurant business. The truck including equipment costs $100,000, has an expected useful lifespan of 10 years, and the estimated salvage value then is $5,000. The food truck will require a $20,000 overhaul after 6 years of use. The food truck costs $5000 per year to operate and maintain, but it will save the underlying restaurant operator $40,000 per year in labour and lease payments. As you are contemplating the offer you evaluate the economics of this idea... Your cost of borrowing money is 10%. You set yourself an MARR of 14%. What should you do? Invest or not? a) Use a timeline graph to summarize cash outflows and inflows over time. b) Conduct the ERR analysis. Explain each step of your analysis and related assumptions. Report the level of ERR for this proposal and discuss whether or not you (the decision maker) should invest?
CB Electronix must buy a piece of equipment to place electronic components on the printed circuit boards it assembles. The proposed equipment has a 10-year life with no scrap value. The supplier has given CB several purchase alternatives. The first is to purchase the equipment for $950,000. The second is to pay for the equipment in 10 equal installments of $125,000 each, starting one year from now. The third is to pay $210,000 now and S85,000 at the end of each year for the next 10 years. Complete parts (a) and (b) below. a. Which alternative should CB choose if its MARR is 11 percent per year? Use an IRR comparison approach. Considering the alternatives in the order of lowest first cost, the best option is the which has an incremental rate of return of %. (Type an integer or decimal rounded to two decimal places as needed. Use an approximate ERR if the IRR cannot be used.)
A machine be purchased for P 2,500,000. It will incur P40,000 in maintenance expenses and can start earning revenues of P125,000 per month as soon as it is installed. It can be sold at the end of its useful life of 4 years at an estimated price of P160,000. The cost of capital is 15% per annum. The reinvestment rate is 12 %. Evaluate using Present Worth, Annual Worth and Future Worth Method to determine if it is acceptable (positive value) note: present WORTH not present value thanks
A machine be purchased for P 2,500,000. It will incur P40,000 in maintenance expenses and can start earning revenues of P125,000 per month as soon as it is installed. It can be sold at the end of its useful life of 4 years at an estimated price of P160,000. The cost of capital is 15% per annum. The reinvestment rate is 12 %. Evaluate using Present Worth, Annual Worth and Future Worth Method to determine if it is acceptable (positive value) note: present WORTH not present value