Three mutually exclusive alternatives may replace the current equipment. Year A B C 0 -$20,000-$24,000-$25,000 1 10,000 10,000 5,000 8- 27 2 5,000 10,000
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Three mutually exclusive alternatives may replace the current equipment.
Year A
B
C
0
-$20,000-$24,000-$25,000
1
10,000
10,000
5,000
8-
27 2
5,000
10,000
5,000
3
10,000
8,000
5,000
4
5,000
5,000
25,000
(a) Construct a choice table for interest rates from 0% to 100%. (b) If the MARR is 12%, which alternative should be selected?
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- 1. An equipment has a first cost of P500,000 and the cost of installation is P30,000. If the salvage value is 10% equipment cost at the end of the its useful life of 5 years. Compute the book value at the end of 3rd year. Using: Straight Line Method Sum of Years Digit Method Sinking Fund Method (if money is worth 6% per annum) Declining Balance Method Using Double Declining Balance MethodAn asset has a first cost of $17000 , an annual operationg cost of $8000 and a salavage value of $5000 after 3 years. calculate the annual worth for one cycle at i=10% . (a) 32145 (b) 4376 (c) 4376 (d) 13325The Company purchased a lot for P250k on which they will construct a building with 3 estimates tabulated below. Determine which alterative should be selected using Benefit Cost Analysis at 10%: Building Height 4 stories 8 stories 12 stories Cost of Building P650k P1.5M P2.4M Resale Value at the end of 30 yrs 350k 720k 1M Net Annual Income 120k 250k 340k What is the value of B-C of the 4 story. a. P62,656.413 b. P26,656.413 c. P276,656.413 d. P6,656.413
- A five-year project has an initial fixed asset investment of $613,600, an initial net working capital investment of $22,200. The project will have an annual operating cash flow (OCF) of (-$76,540). The fixed asset is fully depreciated over the life of the project and has no salvage value. The net working capital will be recovered when the project ends. The required return is 11.7 percent. What is the project's equivalent annual cost, or EAC? O-$248,052.76 O-$182,309.18 O-$147,884.01 O $242,212.221 Southwest Airlines (SWA) is planning to expand its fleet of jets to replace some old planes and to expand its routes. It has received a proposal from Boeing to purchase 112 737’s over the next 4 years. What annual net revenue must each jet produce to break even on its operating cost? The analysis should be done by finding the EUAC for the 10-year planned ownership period. SWA has a MARR of 12%, purchases the jet for $22 million, has operating and maintenance costs of $3.2 million the first year, increasing 8% per year, and performs a major maintenance upgrade costing $4.5M at end of Year 5. Assume the plane has a salvage value at end of Year 10 of $13 million.A project capitalized for ₱44,000 invested in depreciable assets will earn a uniform, annual income of ₱26589 in 10 years. The cost for operation and maintenance total ₱5,000 a year, and annual taxes and insurance will cost 2% of the investment. The company expects its capital to earn 13% before income taxes.What is the equivalent uniform annual cost (EUAC) of the project?
- In the choice of mechanical equipment you are required to submit your recommendation as to which of the two steam shovels for earth excavation is better to buy. The basis is 20 year service and interest at 7%. Taxes and insurance are the same in each case: 5% & 1% respectively. Use Annual Cost to determine 50-ton shovel. 50-ton shovel 70 ton shovel First Cost P30k P38k Life 20 years 20 years Salvage value P2k P3k Annual Operation P15k P17k Annual Upkeep P1.5k P2k Annual Output 150k yards3 200k yards3 a. P21,803.002 b. P12,083.002 c. P21,083.002 d. P21,380.002Three alternative proposals are suggested for a project with the following cash flows. Choose the best alternative based on IRR. MARR = 15%. The life of alternatives is 10 years. Alternatives I II IIIInitialInvestment $350,000 $150,000 $220,000Net Income/ year $35,000 $20,0000 $22,000Salvage Value $100,000 $15,000 $50,000Engineering economy - ENGR 3322 The International Parcel Service has installed a new radio frequency identification system to help reduce the number of packages that are incorrectly delivered. The capital investment in the system is $65,000, and the projected annual savings are tabled below. The system’s market value at the EOY five is negligible, and the MARR is 18% per year. Calculate the present worth of the project. a. $ 35,730 b. $ 36,730 c. $ 37,730 d. None of the choices
- PLEASE ANSWER AND SHOW SOLUTION Machine cost = $15,000; Life = 8 years; salvage value = $3000. What minimum cash return would the investor demand annually from the operation of this machine if he desires interest annually at the rate of 8% in his investment and accumulates a capital replacement fund by investing annual deposits at 5%?Tempe Inc. is considering four mutually exclusive public projects. The capital investment requirements, annual operating & maintenance (O&M) costs, and salvage values of these projects are given below. Each project has a useful life of 40 years, and the minimum attractive rate of return for Tempe is 11% per year. Which of the four projects, if any, should be selected? A B C D Capital Investment $21,500,000 $16,800,000 $30,400,000 $25,700,000 Annual Benefit 4,800,000 4,250,000 5,900,000 4,900,000 Annual O&M Cost 1,790,000 1,130,000 2,040,000 1,800,000 Market Value 2,260,000 2,080,000 3,800,000 2,900,000Methods of Economy Studies An investment of P 250,000 can be made in a project that will produce a uniform annual revenue of P 192,800 for 5 years and then have a salvage value of 10% of the first cost. Operation and maintenance will be P 72,000 per year. Taxes and insurance will be 4% of the first cost per year. The company expects capital to earn 20% before income taxes. Show whether or not the investment is justified economically using1. Present Worth (PW) method2. Future Worth (FW) method3. Annual Worth (AW) method4. Rate of Return (ROR) method5. Payback (Payout) method