PART B.) Decide which of the following alternatives should be selected (if one of them MUST be selected) using an Annual Worth Analysis assuming 12% interest. I want to see AWA and AWB calculated as part of the decision. First Cost, $ Annual Operating Cost, $/year Salvage Value, $ Life, years A 50,000 10,000 13,000 3 B 90,000 4,000 15,000 6
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- A new design of aircraft saves annually fuel consumption of 45,000 gallons of fuel costing$6 per gallon. The new design costs $1 million to accomplish. The airline company’s MARRis 10%. Considering only the fuel savings.What is the simple payback period for the new design? What is the discountedpayback period?3. One of four ovens at the bakery is being considered for replacement. Its salvage value and maintenance costs are given in the table below for several years. A new oven costs P80,000 and this price includes a complete guarantee of the maintenance costs for the first two years, and it covers a good proportion of the maintenance costs for 3 years and 4 years. The salvage value and maintenance costs are summarized in the table below. Both the old and new ovens have similar productivities and energy costs. Should the oven be replaced this year if the MARR equals to 10%?E2 A steel bridge on Louisiana state highway near the Gulf of Mexico is costing $450.000 yearlyin maintenance large chipping, priming, and painting. It originaly cost $1.600.000 when it wasbuilt 15 years ago. The Louisiana bridge engineers estimate that its remaining life is 10 years,then it will need to be replaced because of increased traffic. Its salvage value at any point intime is zero, because the cost of demolition will most like equal its value as scrap steel.A concrete bridge is considered to be the best challenger. It will cost $3.000.000 to build and$100.000 annually in maintenance costs. Its estimated life is 50 years. Its resale value may becounted as zero at any time during its life.No taxes of any kind will be considered for this government project. All costs are in constantdollars of year 0. Inflation may be ignored. Assume that annual benefits for either structure areexactly the same. A discount rate of 10 percent is to be used in analysis.(a) What is the economic life…
- A machine has a first cost of $10,000 and annual costs of $3500. There is no salvage value, and interest is 10%. If the project’s useful life is described by the following data, what is the annual worth of costs? Useful Life (years) 4 5 6 7 Prob. of life (%) 5 22 41 32 (a) $3500 (b) $5127 (c) $5554 (d) $5796# 7 Use Excel - Be organized. Use Excel formulas/functions. A new high efficiency motor is being considered for a large compressor. It will cost $22,000 but it will save $8250 per year in O&M. The useful life of the motor is 8 years. The company has a 3-year discounted payback period, and a MARR of 15%. (a) Should the motor be bought?1. The Present Worth Method A project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $50,000; maintenance costs that start at $5,000 at the end of year (EOY) 1 and increase by $1,000 for each of the next 4 years, and then remain constant for the following 5 years; savings of $20,000 per year (EOY 1–10); and finally a resale value of $35,000 at the EOY 10. If the project has a 10-year life and the firm’s MARR is 10% per year, what is the present worth of the project? Is it a sound investment opportunity?
- 1. An industrial plant is considering the purchase of a centrifugal pump. Three offers were received and basis of selection have been tabulated as follows: Offer A Offer B Offer C Price of pump P60,000 P96,000 P120,000 Economic life, years 3 5 10 Salvage value at end of economic life 5,000 10,000 8,000 Yearly maintenance cost 10,000 6,000 5,000 . If cost of money is 14%, what offer would you recommend to be purchased? Use the rate of return method, the annual cost method, present worth method and equivalent uniform annual cost method for the evaluation Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.4.) A piece of equipment is required for a project. Consider the two options. For each option, determine the following: a. A Cash Flow Diagram b. The Present Worth for a period of ten years c. Estimated Break-Even Point I. Option 1: Initial cost to purchase is equipment is $450,000. Annual O&M costs are $1,200 per year starting at the end of the second year. Estimated annual savings for the new piece of equipment is $60,000 starting at the end of the first year. The interest rate for purchasing the equipment is 6%. The salvage value is expected to be $110,000 at the end of 8 years. II. Option 2: Leasing the new piece of equipment would cost $45,000 per year. Annual O&M costs are $1,800 per year starting at the end of the second year. Estimated annual savings for the new piece of equipment is $55,000 starting at the end of the first year. The interest rate for leasing the equipment is 6%. A credit of $4,000 is expected beginning at the fourth year for leasing the equipment.A five-year project has an initial fixed asset investment of $613,600, an initial net working capital investment of $22,200. The project will have an annual operating cash flow (OCF) of (-$76,540). The fixed asset is fully depreciated over the life of the project and has no salvage value. The net working capital will be recovered when the project ends. The required return is 11.7 percent. What is the project's equivalent annual cost, or EAC? O-$248,052.76 O-$182,309.18 O-$147,884.01 O $242,212.22
- 4) Which of the following power plants is better investment, assuming 8% interest on the sinking fund and no salvage value in either case, taxes/insurance at 10% and interest on capital at 12%. Use ROR and Present Worth Method. - Coal plant which costs P1M, last 10 years and cost annually P100k to operate. - Fuel-oil plant which costs P800k will last 7 years and cost annually P70k to operate.1. A machine cost P10M and will have scrap value of 10% of the first cost at theend of 10 years. If money is worth 12%. Find the annual investment and thecapitalized cost of the machine.draw cash flow diagram please A project has the following cash flows. Determine the exact ROR for this project. Item Cash Flow First cost, $ 250,000 Annual Revenues, $/year 16,000 Additional Revenue, year 20, $ 600,000 O&M costs, $/year 2,500 Life, years 20