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Q: What are the three aspects of the replacement problem?
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Consider two basic approaches to analyzing replacement problems: the cash flow approach?
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- Define replacement analysisPLEASE WRITE YOUR SOLUTION ON A PAPER, THANK YOU A Contractor imported a bulldozer for his job, paying P 350,000 to the Manufacturer. Freight andInsurance charges amounted to P 18,000; customs’ broker’s fees and arrastre services, P 8,500;taxes, permits and other expenses, P 35,000. If the contractor estimates the life of the bulldozer tobe 10 years with a salvage value of P 20,000, determine the book value at the end of 8 years, a. using the Double Declining Balance Method. b. using the Declining Balance Method. c. using the Sinking Fund Method, i = 10% d. using the Sum of the Years MethodA replacement analysis is most objectively conducted from the viewpoint of: (a) An outsider (b) A consultant (c) A nonowner (d) Any of the above
- Outline Maintenance Implementation Strategies for the following:1.Management roles2.Engineer roles3.Technologist/Technician roles4.Operator roles.Peachtree Construction Company, a highway contractor, is considering the purchase of a new trench excavator that costs 300000 and can dig a 3-foot-wide trench at the rate of 16 feet per hour. The contractor gets paid according to the usage of the equipment, 100 per hour. The expected average annual usage is 500 hours, and maintenance and operating costs will be 10 per hour. The contractor will depreciate the equipment by using a five-year MACRS, units-of-production method. At the end of five years, the excavator will be sold for 100000. Assuming the contractor’s marginal tax rate is 25% per year, determine the annual after-tax cash flow. In excel.A replacement analysis is most objectively conducted from the viewpoint of:a. an outsider.b. a consultant.c. a non-owner.d. any of the above.
- n Project A Project B 0 -$7,000 -$5,000 1 -$2,500 -$2,000 2 -$2,000 -$2,000 3 -$1,500 -$2,000 4 -$1,500 -$2,000 5 -$1,500 -$2,000 6 -$1,500 -$2,000 7 - -$2,000 8 - - Suppose projects A and B are mutually exclusive. The required service period is 8 years and comparable equipment will be leased for $3,000 per year payable at the end of each year for the remaining years of the required service period. Which project is a better choice at 15%? Use PW(15%) criterion and show your equation with numbers plugged into factors and your numerical result for each option.The economic service life of an asset is the number of years at which the EUAC is _____________. a) minimum b) maximum c) equal to 1 d) equal to 0An investment in a new piece of equipment costing P 50,000 is expected to yield the following over its 5-year useful life: Revenues (cash), P 40,000; operating costs (cash), P 18,000; depreciation, P 10,000. The present value of P 1 received annually for 5 years and discounted at the cost of capital is 4.10 assuming that all cash flows occur at year-end. Ignoring tax effect, what is the benefit/cost ratio (profitability index) for this piece of equipment?
- What are the three aspects of the replacement problem?Explain the annual-equivalent worth (AE) criterion?A California utility firm is considering building a 50-megawatt geothermalplant that generates electricity from naturally occurring underground heal. The binary geothermal system will cost $85 million to build and $6 million (including any income-tax effect) to operate per year. (Unlike a conventional fossilfuel plant, this system will require virtually no fuel costs.) The geothermal plant is to last 25 years. At the end of that time, the expected salvage value will be about the same as the cost to remove the plant. The plant will be in operation for 70% (the plant-utilization factor) of the year (or 70% of 8,760 hours per year). If the firm's MARR is 14% per year, determine the cost of generating electricity per kilowatt-hour.