The present worth of an alternative that provides infinite service is called its: (a) Net present value (b) Discounted total cost (c) Capitalized cost (d) Perpetual annual cost
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The present worth of an alternative that provides
infinite service is called its:
(a)
(b) Discounted total cost
(c) Capitalized cost
(d) Perpetual annual cost
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- The AW values of three cost alternatives are $−23,000 for alternative A, $−21,600 for B, and $−27,300 for C. On the basis of these results, the decision is to: (a) select alternative A (b) select alternative B (c) select alternative C (d) select the Do Nothing alternativeThe Texas Department of Transportation (TxDOT) is considering two designs for crash barriers along a reconstructed portion of I-10. Design 2B will cost $3 million to install and $125,500 per year to maintain. Design 4R will cost $3.7 million to install and $55,000 per year to maintain. Determine which design should be selected based on a rate of return analysis if TxDOT uses a MARR of 6% per year and a 20-year project period. The rate of return is Not attempted ______%.Two options are available for setting up a wireless meter scanner and controller. A simple setup is good for 2 years and has an initial cost of $14,000, no salvage value, and an AOC of $27,000 per year. A more permanent system has a higher first cost of $73,000, but it has an estimated life of 6 years and a salvage value of $15,000. It costs only $14,000 per year to operate and maintain. If the two options are compared using an incremental rate of return, what is the incremental cash flow in year 6? The incremental cash flow in year 6 is $
- Two roadway designs are under consideration for access to a permanent suspension bridge. Design 1A will cost $3 million to build and $100,000 per year to maintain. Design 1B will cost $3.5 million to build and $40,000 per year to maintain. Both designs are assumed to be permanent. Use an AWbased rate of return equation to determine (a) the breakeven ROR, and (b) which design is preferred at a MARR of 10% per year.UPS Freight plans to spend $100 million on new long-haul tractor-trailers. Some of these vehicles will include a new shelving design with adjustable shelves to transport irregularly sized freight that requires special handling during loading and unloading. Though the life is relatively short, the director wants a capitalized cost analysis performed on the two final designs. Compare the alternatives at the MARR of 10% per year using (a) tabulated factors, and (b) a spreadsheet.The rate of return for alternative X is 18% per year and for alternative Y is 17% per year, with Y requiring a larger initial investment. If a company has a minimum attractive rate of return of 16% per year, a)The company should select alternative X. b)The company should select alternative Y. c)The company should conduct an incremental analysis between X and Y to select the economically better alternative. d)The company should select the do-nothing alternative.
- Two methods can be used for producing expansion anchors. Method A costs $80,000 initially and will have a $15,000 salvage value after 3 years. The operating cost with this method will be $30,000 per year. Method B will have a first cost of $120,000, an operating cost of $8000 per year, and a $40,000 salvage value after its 3-year life. At the MARR of 12% per year, which method should be used on the basis of a present worth analysis?EP Electric has identified two new methods to treat its cooling water. Alternative I (for inflow) would treat the raw water with a conventional reverse osmosis system so that the cycles of concentration could be increased from 5 to 20. This will result in water cost savings of $360,000 per year and chemical cost savings of $56,000 per year. The initial cost of the equipment will be $2.3 million with an operating cost of $125,000 per year. Alternative B (for blowdown) will treat the cooling tower blowdown water using a highpressure seawater reverse osmosis system to recover most of the water that is sent to an evaporation pond. This option will result in water savings of $270,000 per year. The cost of the system will be $1.2 million with an operating cost of $105,000 per year. Assuming one of the two methods must be installed, determine which is preferred on the basis of the incremental ROR value using MARR of 5% per year, which is a typically low return expected of government projects.…Based on estimates the data for 2 types of bridges with different lives are as follows. If the minimum attractive rate of return is 9%, determine which project is more desirable using Annual Cost Method & Rate of Return Method.
- A window frame manufacturer is searching for ways to improve revenue from its triple-insulated sliding windows, sold primarily in the far northern areas of the United States. Alternative A is an in- crease in TV and radio marketing. A total of $300,000 spent now is expected to increase revenue by $60,000 per year. Alternative B requires the same investment for enhancements to the in-plant manufacturing process that wil improve the temperature retention properties of the seals around each glass pane. New revenues start slowly for this alternative at an estimated $10,000 the first year, with growth of $15,000 per year as the improved product gains reputation among builders. The MARR is 8% per year and the maximum projection period is 10 years for either alternative.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?The Asia Corporation manufactures compressors for commercial airconditioning systems. A new compressor design is being evaluated as a potential replacement for the most frequently used unit. The new design involves major changes that have the expected advantage of better efficiency. From the perspective of a typical user, the new compressor would have an increased investment of $8,600 relative to the present unit and an annual expense savings dependent upon the extent to which the design goal is met in actual operations. Estimates by the multidisciplinary design team of the new compressor achieving four levels (percentages) of the efficiency design goal and the probability and annual expense savings at each level are as follows: Based on a before-tax analysis (MARR =18% per year, analysis period of 6 years, and a salvage value of zero) and E(PW) as the decision criterion, is the new compressor design economically preferable to the current unit?