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- An auto repair company needs a new machine that will check for defective sensors. The machine has an Initial investment of $224,000. Incremental revenues, including cost savings, are $120,000, and Incremental expenses, including depreciation, are $50,000. There is no salvage value. What is the accounting rate of return (ARR)?In trying to decide whether or not to replace a sorting/baling machine in a solid waste recycling operation, an engineer calculated the annual worthvalues for the in-place machine and a challenger. On the basis of these costs, the defender should be replaced:a. now.b. 1 year from now.c. 2 years from now.d. 3 years from now.All equipment costs will continue to be depreciated on a straight-line basis. For simplicity, ignore income taxes and the time value of money. Q. Should TechGuide upgrade its production line or replace it? Show your calculations.
- A company needs a CNC machine. One of four alternative CNC machines will be selected. Machines have no salvage value. Minimum attractive rate of return is %10. The costs of the machines are given in the table below. And please make profitability by using equivalent value methods such as present value, annual equivalent cost and future value, and return rate methods such as internal rate of return and external rate of return. Finally, would you compare all the data? The problem has no input values, only the values in the photo I sent you.If you were analyzing a replacement project and suddenly learnedthat the old equipment could be sold for $1,000 rather than $400,would this new information make the replacement look better orworse? Explain.A piece of production equipment is to be replaced immediately because it no longer meets quality requirements for the end product. The two best alternatives are a used piece of equipment (E1) and a new automated model (E2). The economic estimates for each are shown in the accompanying table. The MARR is 15% per year. Solve, a. Which alternative is preferred, based on the repeatability assumption? b. Show, for the coterminated assumption with a five-year study period and an imputed market value for Alternative B, that the AW of B remains the same as it was in Part (a). [And obviously, the selection is the same as in Part (a).] Explain why that occurs in this problem.
- An automatic process controller will eliminate the current manual control operation. Annual cost of the current method is $4,000. If the controller has a service life of 13 years and an expected market value of 11% of the first cost, what is the maximum economical price for the controller? Ignore interest. (a) $28,869 (b) $58,426 (c) $26,358 (d) $25,694 (e) $53,344.Don't use excel or any tables, compute by a conventional method. Completely solve to fill in Blank 1, Blank 2, and Blank 3. Box the final answers. Write legibly or typewrite the solutions. A piece of production equipment is to be replaced immediately because it no longer meets quality requirements for the end product. The two best alternatives are a used piece of equipment (E1) and a new automated model (E2). The economic estimates for each are shown in the accompanying table. The MARR is 15% per year. Which alternative is preferred based on the: (a) coterminated assumption with a ten-year study period and an imputed market value for Alternative b? Use FW method. FW (E1) = $_____? FW (E2) = $_____? The best alternative is E_____?Don't use excel or any tables, compute by a conventional method. Completely solve to fill in Blank 1, Blank 2, and Blank 3. Box the final answers. Write legibly or typewrite the solutions. A piece of production equipment is to be replaced immediately because it no longer meets quality requirements for the end product. The two best alternatives are a used piece of equipment (E1) and a new automated model (E2). The economic estimates for each are shown in the accompanying table. The MARR is 15% per year. Which alternative is preferred based on the: (b) coterminated assumption with a ten-year study period and the estimated market value for Alternative B at the end of year ten is $25,000? Use Present Worth (PW) method. PW (E1) = $_____? PW (E2) = $_____? The best alternative is E_____?
- Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?Suppose a new production method will be implemented if a hypothesis test supports the conclusion that the new method reduces the mean operating cost per hour. State the appropriate null and alternative hypotheses if the mean cost for the current production method is $220 per hour. What is the Type I error in this situation? What are the consequences of making this error? What is the Type II error in this situation? What are the consequences of making this error?You are asked to determine whether to replace a machine that was purchased 5 years ago for $10,000 with a new and better version that just came out. It cost the same price but offers twice the benefit and 50% less maintenance cost. What should you take into consideration in your analysis and what should you ignore?
