The following are two alternatives need to be evaluated and select the best available one: X -35000 -6000 7000 2 Interest 10% per year First cost ($) Operating Cost ($ per year) Salvage Value ($) Asset life (year) O a. Reject X and Y O b. Select X and Y OC. Select X Od. Select Y Y -40000 -5000 10000 4

The following are two alternatives need to be evaluated and select the best available one: X -35000 -6000 7000 2 Interest 10% per year First cost ($) Operating Cost ($ per year) Salvage Value ($) Asset life (year) O a. Reject X and Y O b. Select X and Y OC. Select X Od. Select Y Y -40000 -5000 10000 4

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6. Electrical switch manufacturing companies must choose one of three different assembly methods. Method A will have an initial cost of $40,000, annual operating costs of $9,000, and a 2 year lifetime. Method B will cost $80,000 to purchase and will have an annual operating cost of $6,000 over its 4 year service life. Method C will cost $130,000 initially with an annual operating cost of $4,000 over its 8 year life. Methods A and B will have no salvage value, but method C will have a salvage value for some equipment that is approximately $12,000. Which method to choose? Use present value analysis at an interest rate of 10% per annum if the alternatives are mutually independent A. A and B B. B and C C. C D. There is no economically feasible solution Please solve based the option max 15 minutes ASAP
2. Two methods can be used for injection molding insulin injection pens. Method A Molding costs $120,000 initially and will have a $30,000 salvage value after 5 years. The operating cost with this method will be $20,000 per year. Method B Molding will have a first cost of $150,000, an operating cost of $15,000 per year, and a $40,000 salvage value after its 6 - year life. Determine which method should be selected at a MARR of 10%. - Use Present Worth Analysis Solve in Excel
In order to replace an old process for producing a polymer that reduces friction loss in engines, two current-technology machines have been identified. Process K will have a first cost of $160,000, an operating cost of $7000 per month, and a salvage value of $50,000 after 1 year and $40,000 after its maximum 2-year life. Process L will have a first cost of $210,000, an operating cost of $5000 per month, and salvage values of $100,000 after 1 year, $70,000 after 2 years, $45,000 after 3 years, and $26,000 after its maximum 4-year life. You have been asked to determine which process is better using a study period of (a) 1 year, (b) 2 years, and (c) 3 years. The company’s MARR is 12% per year compounded monthly.
New microelectronics testing equipment was purchased 2years ago by Mytesmall Industries at a cost of $600,000. Atthat time, it was expected to be used for 5 years and thentraded or sold for its salvage value of $75,000. Expandedbusiness in newly developed international markets is forcingthe decision to trade now for a new unit at a cost of$800,000. The current equipment could be retained, ifnecessary, for another 2 years, at which time it would have a$5000 estimated market value. The current unit is appraisedat $350,000 on the international market, and if it is used foranother 2 years, it will have M&O costs (exclusive ofoperator costs) of $125,000 per year. Determine the valuesof P, n, S, and AOC for this defender if a replacementanalysis were performed today. P = market value =$350,000AOC = $125,000 per yearn = 2 yearsS = $5,000
The first costs of an equipment is P 65,000 and a salvage value of P 3,000 at the end of its 6 – year life. Find the book value after 3 years using the Sum of the Years Digit Method.
Give typing answer with explanation and conclusion Two processes can be used for producing a polymer that reduces friction loss in engines. Process T will have a first cost of $780,000, an operating cost of $80,000 per year, and a salvage value of $80,000 after its 2-year life. Process W will have a first cost of $1,280,000, an operating cost of $25,000 per year, and a $120,000 salvage value after its 4-year life. Process W will also require updating at the end of year 2 at a cost of $90,000. Which process should be selected on the basis of a present worth analysis at a MARR of 12% per year? The present worth of process T is $− , and the present worth of process W is $− . The process selected on the basis of the present worth analysis is process (Click to select) .
Method of full coating is taking into account a. Only direct costs and respective contribution margin b. All costs including fixed and variable costs c. Only direct costs and respective gross margin d. Total sum of fixed costs,but only a paid amount of variable cos
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Estimate the cost of ownership in terms of present worth for a machine based on the following data: Cost of machine = P120,000 Resale value in 8 years = P30,000 Maintenance, repair etc. = P5,000 per year and increasing P800 each year Rate of interest = 16%
8.24 The Ecology Group wishes to purchase a piece of equipment for various metals recycling. Machine 1 costs $123,000, has a life of 10 years, an AOC of $5000, and requires one operator at a cost of $24 per hour to process 10 tons per hour. Machine 2 costs $70,000, has a life of 6 years, an AOC of $2500, and requires two operators at a cost of $24 per hour for each operator to process 6 tons per hour. a. Determine the breakeven tonnage of scrap metal at i = 7% per year and select the better machine for a processing level of 1000 tons per year.
Guardian is a national manufacturing company of home health care appliances. It is faced with amake-or-buy decision: a newly engineered lift can be installed in a car trunk to raise and lower awheelchair.Buy: The steel arm of the lift can be purchased for $0.60 per unit or make in house.Make: If manufactured on site, two machines will be required. Machine A is estimated to cost$18,000, have a life of 6 years, and a $2,000 salvage value. Machine B will cost $12,000, have a life of4 years, and a $-500 salvage value (carry-away cost). In addition, machine A will require anoverhaul after 3 years costing $3,000. The AOC for A is expected to be $6,000 per year and for B$5,000 per year. A total four operators will be required for the two machines at a rate of $12.50 perhour per operator. 1,000 units will be manufactured in a normal 8-hour period.Use MARR=15% to find the number of units to be manufacture each year
If the B/C value is exactly 1.0 or very near 1.0, non-economic factors can assist make the decision for the best alternative. Select one: True False