The following pair of assets differ only in the MARR. The problem asks you to determine the effect of this difference on the economic life and to explain the result. All assets decline in value by 20 percent ofcurrent value each year. Installation costs are zero for all assets. Further data concerning the four pairs of assets are given in the table that follows.Initial OperatingRate of OperatingAssetFirst CostCostCost IncreaseMARR$130,000$130,000$35,000$35,00012.5%/year12.5%/yearA5%В25%a. Determine the economic lives for assets A and B.b. Create a diagram showing the EAC(capital), the EAC(operating), and the EAC(total) for assets A and B.c. Explain the difference in economic life between A and B.a. The economic life of asset A isyears, and the economic life of asset B isyears.(Type whole numbers.)B

Economic lives for an asset refers to the time period when the asset is useful for the owners. The…

The following pair of assets differ only in the MARR. The problem asks you to determine the effect of this difference on the economic life and to explain the result. All assets decline in value by 20 percent current value each year. Installation costs are zero for all assets. Further data concerning the four pairs of assets are given in the table that follows. Initial Operating Cost Rate of Operating Cost Increase 12.5%/year 12.5%/year Asset First Cost MARR A $130,000 $35,000 $35,000 5% $130,000 25% a. Determine the economic lives for assets A and B.

The following pair of assets differ only in the MARR. The problem asks you to determine the effect of this difference on the economic life and to explain the result. All assets decline in value by 20 percent current value each year. Installation costs are zero for all assets. Further data concerning the four pairs of assets are given in the table that follows. Initial Operating Cost Rate of Operating Cost Increase 12.5%/year 12.5%/year Asset First Cost MARR A $130,000 $35,000 $35,000 5% $130,000 25% a. Determine the economic lives for assets A and B.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 3E

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A man is considering putting up his own enterprise, where an investment of 800,000Php will be required and will take 15 years to recoup . He estimates his annual sales at 800,000Php along with the following operating costs. Materials ............................. 160,000Php/ yearLabor ............................. 280,000Php/ yearOverhead ............................. (40,000 + 10% of sales) Php/ yearSelling Expense............................. 60,000Php/ yearThe man will give up his regular job paying 216,000 Php per year and devote all his time to the operation of his business, this will result in decreasing his labor cost by 40,000Php per year, material cost by 28,000Php per year and overhead cost by 32,000 Php per year. If the man expects to earn at least 20% of his capital, should he invest? solve in the present worth cost method
The following pair of assets differ only in the MARR. The problem asks you to determine the effect of this difference on the economic life and to explain the result. All assets decline in value by 20 percent of current value each year. Installation costs are zero for all assets. Further data concerning the four pairs of assets are given in the table that follows. Asset First Cost Initial Operating Cost Rate of Operating Cost Increase MARR A $120,000 $30,000 12.5% 5% B $120,000 $30,000 12.5% 25% a. Determine the economic lives for assets A and B. The economic life of asset A is (enter your response here) years, and the economic life of asset B is (enter your response here) years. b. Create a diagram showing the EAC(capital), the EAC(operating), and the EAC(total) for assets A and B. c. Explain the difference in economic life between A and B.
I want you to provide me the Cash Flow diagram of the problem. Only cash flow diagram, the solution is already there. Thanks in advance! The annual estimated cash flow is $140,000. The salvage value will be 12% of the initial price after 5 years. The discount rate (r) is 18% Let us assume the initial price of the doughnut machine be X. PV of cash inflows=PV of cash outflows$140,000×PVAF4,18%+.12X×PVF5,18%=X$140,000×2.69006180465+.12X×0.43710921621=X$376,608.652651=X-0.05245310594$376,608.652651=0.94754689406XX=$397,456.479475 The maximum purchase price of the doughnut machine is $397,456.48.
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.
"All growth models. You are evaluating the potential purchase of a small company that currently generates $42,500 in cash flow after taxes (D0 = $42,500). Based on a review of similar risk investment opportunities, you should earn a return rate of 18% from the proposed purchase. Since you're not very sure about future cash flows, you decide to calculate the value of the company assuming some possibilities for the cash flow growth rate. a) What is the value of the company if cash flows are expected to grow at an annual rate of 0% from now on? b) What is the value of the company if cash flows are expected to grow at a constant annual rate of 7% from now on? c) What is the value of the company if cash flows are expected to grow at an annual rate of 12% for the first 2 years and then, starting from year 3, the growth rate decreases to a constant annual rate of 7%?"
MR is a manufacturer of industrial fridges, freezers, and air conditioners. In December, the productionplanner needs to submit a production plan to the plant manager for the next year. The aggregate forecast foreach quarter of next year is Q1: 14,800; Q2: 26,400; Q3: 35,000, and Q4: 19,200 units. The beginning inventoryin January is 0, and the year-end inventory in December of next year can be 0. It costs MR $24 to hold anappliance in inventory for one quarter. Shortages are undesirable. Assume that all shortage will be backordered, and that back-order cost is $100 per unit per quarter. There are 160 permanent workers who produce19,200 units per quarter. In busy quarters, workers can produce up to 9,600 additional units during overtime.Regular time labour cost is $60 per unit appliance and overtime labour cost is $83 per unit. MR can hire up to160 temporary workers for a second shift. Assume temporary workers have the same productivity and canproduce up to 19,200 units per quarter. A…
A man is considering putting up his own enterprise, where an investment of 800,000 will be required and will take 15 years to recoup. He estimates his annual sales at 800,000 along with the following operating costs. Materials =160,000/ yearLabor = 280,000/ yearOverhead = (40,000 + 10% of sales)/ yearSelling Expense = 60,000/ yearThe man will give up his regular job paying 216,000 Php per year and devote all his time to the operation of his business, this will result in decreasing his labor cost by 40,000 per year, material cost by 28,000 per year and overhead cost by 32,000 per year. If the man expects to earn at least 20% of his capital, should he invest? Solve using a) Rate of return method b) annual worth method c)present worth method d)equivalent uniform annual cost method
Solve for q, AVC - MC = 0 AVC = 10 - 0.03q + 0.00005q^2 MC = 10 - 0.06q + 0.00015q^2
2.4.1 Total Cost in Material SelectionIn many cases, economic selection among materials cannot be based solely on the costs ofmaterials. Frequently, a change in materials will affect the design and processing costs, and shipping costsmay also be altered.Care should be taken in making economic selections between materials to ensure that anydifferences in shipping costs, yields, or resulting scrap are taken into account. Commonly, alternativematerials do not come in the same stock sizes, such as sheet sizes and bar lengths. This may considerablyaffect the yield obtained from a given weight of material. Similarly, the resulting scrap may differ forvarious materials.In addition to deciding what material a product should be made of, there are often alternativemethods or machines that can be used to produce the product, which, in turn, can impact processingcosts. What could be the factors affecting the cost of materials that one should consider?
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Both connected if possible pls answer
Engr. Roque owner of the HarRoq’s Ice Plant is monitoring the cashflow of the plant. Based on the following information, how many ice blocks must produce and able to sell per month in order to break even? Ice block price Php 50.00/ice block Cost of electricity Php 30.00/ice block Tax to be paid Php 3.00/ice block Real estate Tax Php 4,500.00/month Salaries and wages Php 30,000.00/month Others Php 15,000.00/month