The capitalized cost of an initial investment of $200,000 and annual investments of $30,000 forever at an interest rate of 10% per year is closest to: (a) $−230,000 (b) $−300,000 (c) $−500,000 (d) $−2,300,000
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The capitalized cost of an initial investment of
$200,000 and annual investments of $30,000 forever
at an interest rate of 10% per year is closest to:
(a) $−230,000 (b) $−300,000
(c) $−500,000 (d) $−2,300,000
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- The capital investment cost for a switchgrass-fueled ethanol plant with a capacity of 250,000 gallons per year is $6 million. The cost-capacity factor for this particular plant technology is 0.59 for capacities ranging from 200,000 gallons per year to 500,000 gallons per year. What is the estimated capitalinvestment for a similar ethanol plant with a capacity of 450,000 gallons per year?A machine used to shread cardboard boxes for composting has a first cost of $10,000, an AOC of $7000 per year, a 3-year life, and no appreciable salvage value. Assume you were told that the service provided by the machine will be needed for only 5 years, which entails a repurchase and retention for only 2 years.What salvage value, S, is required after 2 years in order to make the 2-year AW value the same as it is for its 3-year life cycle AW? Assume i = 10% per year. Solve using factors and, if assigned, using a spreadsheet and Goal Seek.An engineer must decide between two ways to pump concrete to the top of a seven-story building. Plan 1 requires the leasing of equipment for $60,000 initially and will cost between $0.40 and $0.95 per metric ton to operate, with a most likely cost of $0.50 per metric ton. The pumper can pump 100 metric tons per 8-hour day. If leased, the asset will have a contract period of 5 years. Plan 2 is a rental option that will cost $17,000 per year. In addition, an extra $13.5 per hour labor cost will be incurred for operating the rented equipment per 8-hour day. Which plan should the engineer recommend if the equipment will be needed for 90 days per year? The MARR is 12% per year.
- An engineer must decide between two ways to pump concrete to the top of a seven-story building. Plan 1 requires the leasing of equipment for $60,000 initially and will cost between $0.40 and $0.95 per metric ton to operate, with a most likely cost of $0.50 per metric ton. The pumper can pump 100 metric tons per 8-hour day. If leased, the asset will have a contract period of 5 years. Plan 2 is a rental option that will cost $12,000 per year. In addition, an extra $17.5 per hour labor cost will be incurred for operating the rented equipment per 8-hour day. Which plan should the engineer recommend if the equipment will be needed for 55 days per year? The MARR is 11% per year. The annual worth of plan 1 lease optimistic is $ . The annual worth of plan 1 most likely is $_____ . The annual worth of plan 1 pessimistic is $___________ . The annual worth of plan 2 rental is $_________ .A process can be completed using either Alternative X or Y, where Y is an automated version of X. Alternative X has fixed costs of $10,000 per year with a variable cost of $50 per unit. If the process is automated, the fixed cost for Y will be $5,000 per year and its variable cost will be only $30 per unit. The minimum number of units that must be produced each year for alternative Y to be favored is closest to:a. Alternative Y will be favored for any level of productionb. 125c. 375d. Alternative X will be favored for any level of productionDefine the term capitalized cost and give a realworld example of something that might be analyzed using a capitalized cost evaluation technique.
- Authentic Serai Halia is a catering firm that serves variety of authentic traditional Malaysian cuisine. Wasimuddin AW and Saprang J, the restaurant owners want to expand their successful operations to caterfoods for some major events in a neighboring town. After investigating their market segment, they have narrowed their choices to two proposals. First proposal is to project a capacity of 10 events per month.This would result in a cost of RM2,500 a month plus a cost of RM250 per event. Another proposal would have a capacity of 20 events per month, a cost of RM3,200 per month, and a cost of RM190 per event. The firm would charge RM480 for each event. Determine: (a) The break-even volume for each proposal.(b) The profit (or loss) would each proposal produce if monthly demand is 12 events.(c) If monthly demand is 25 events, which proposal would yield the greater profit?A piece of onboard equipment has a first cost of $600,000, an annual cost of $92,000, and a salvage value that decreases to zero by $150,000 each year of the equipment’s maximum useful life of 5 years. Assume the company’s MARR is 10% per year. (a) Determine the ESL by hand. (b) Use a spreadsheet with a graph indicating the capital recovery, AOC, and total AW per year to determine the ESL.Two methods to control newly discovered poisonous weeds in bar-ditches on the sides of county roads in New Farmendale are under consideration. Method A involves use of a 20-year life lining at an initial cost of $14,000 and an annual maintenance cost of $3 per kilometer (km). Method B involves spraying a chemical that costs $40 per liter. One liter will treat 8 km, but the treatment must be applied four times per year. In determining the number of km per year that would result in breakeven, the variable cost for method B is closest to: (a) $5 per km (b) $15 per km (c) $20 per km (d) $40 per km
- Two methods can be used for producing solar panels for electric power generation. Method 1 will have an initial cost of $550,000, an AOC of $160,000 per year, and $125,000 salvage value after its 3-year life. Method 2 will cost $830,000 with an AOC of $120,000, and a $240,000 salvage value after its 5-year life. Assume your boss asked you to determine which method is better, but she wants the analysis done over a 3-year planning period. You estimate the salvage value of method 2 will be 35% higher after 3 years than it is after 5 years. If the MARR is 10% per year, which method should the company selectAuthentic Serai Halia is a catering firm that serves variety of authentic traditional Malaysian cuisine. Wasimuddin AW and Saprang J, the restaurant owners want to expand their successful operations to cater foods for some major events in a neighboring town. After investigating their market segment, they have narrowed their choices to two proposals. First proposal is to project a capacity of 10 events per month. This would result in a cost of RM2,500 a month plus a cost of RM250 per event. Another proposal would have a capacity of 20 events per month, a cost of RM3,200 per month, and a cost of RM190 per event. The firm would charge RM480 for each event. Determine i) The break-even volume for each ii ) The profit (or loss) would each proposal produce if monthly demand is 12 iii) If monthly demand is 25 events, which proposal would yield the greaterprofit?Two methods can be used to produce solar panels for electric power generation. Method 1 will have an initial cost of $800,000, an AOC of $150,000 per year, and $125,000 salvage value after its 3-year life. Method 2 will cost $910,000 with an AOC of $125,000 and a $230,000 salvage value after its 5-year life. Assume your boss asked you to determine which method is better, but she wants the analysis done over a three-year planning period. You estimate the salvage value of Method 2 will be 40% higher after three years than it is after five years. If the MARR is 14% per year, which method should the company select? Which method should the company select?