What is the total lifetime cost of the system given the following information? The initial cost of the system is $4800. The system has annual maintenance costs of $175. On the fourth year, an overhaul cost of $350 is scheduled. The system is expected to last for 5 years. The discount rate is 8%. Answer to the nearest dollar $________.00.
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What is the total lifetime cost of the system given the following information?
The initial cost of the system is $4800. The system has annual maintenance costs of $175. On the fourth year, an overhaul cost of $350 is scheduled. The system is expected to last for 5 years. The discount rate is 8%. Answer to the nearest dollar $________.00.
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- 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.Saxon Products, Incorporated, is investigating the purchase of a robot for use on the company’s assembly line. Selected data relating to the robot are provided below: Cost of the robot $ 1,800,000 Installation and software $ 470,000 Annual savings in inventory carrying costs $ 214,000 Annual increase in power and maintenance costs $ 34,000 Salvage value in 5 years $ 74,000 Useful life 5 years In addition to the data above, engineering studies suggest that use of the robot will result in a savings of 29,000 direct labor-hours each year. The labor rate is $14 per hour. Also, the smoother work flow made possible by the use of automation will allow the company to reduce the amount of inventory on hand by $404,000. This inventory reduction will take place at the end of the first year of operation; the released funds will be available for use elsewhere in the company. Saxon Products has a 16% required rate of return. Click here to view Exhibit 14B-1 and Exhibit…#23 * Using NPW to Decide Between Competing Projects: Machine X has an initial cost of $12,000 and annual maintenance of $700 per year. It has a useful life of four years and no salvage value at the end of that time. Machine Y costs $22,000 initially and has no maintenance costs during the first year. Maintenance is $200 at the end of the second year and increases by $200 per year thereafter. Machine Y has a useful life of eight years and an anticipated salvage value of $5,000 at the end of its useful life. If the MARR is 6%, what is the approximate Net Present Worth (NPW) of machine X? A. -$28,563 B. -$25,852 C. -$32,085 D. -$22,318
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- Downtown Abbey Corp. wants to buy a new sheep-shearing machine. It has narrowed down the choice to two machines that can do the job equally well: Machine name The Shearilizer Naked Sheep Purchase price 10,000 20,000 Useful life (years) 4 7 Maintenance cost (end of each year) 4,000 3,000 The relevant discount rate is 10%. There are no taxes. What is the net present value of all costs associated with the Shearilizer (in absolute terms)? What is the equivalent annual annuity for the Shearilizer (in absolute terms)? What is the equivalent annual annuity for the Naked Sheep (in absolute terms)? Which machine should the company buy? The one with the higher equivalent annual cost The one with the lower equivalent annual costYou are the FPE at a petroleum plant and are overseeing the design and installation of a new fire pump. There are two separate options an electric pump and a diesel pump. The electric pump includes an initial investment of $5,000,000 with a yearly maintenance of $150,000. The diesel pump includes an initial investment of $3,500,000 with a yearly maintenance of $400,000. Assume both pumps have a life expectancy of 10 years and the interest rate is 6%. Which system is the most desirable? The electric pump because it costs approximately $340,000 less than the diesel pump. The electric pump because it costs approximately $520,000 less than the deisel pump. The diesel pump because it costs approximately $520,000 less than the electric pump. The diesel pump because it costs approximately $340,000 less than the electric pump.A food processing plant consumes 600,000 kW of electric energy annually and pays an average of ₱ 2.00 per kWh. A study is being made to generate its own power to supply the energy required in the food processing plant, and the power plant installation would cost ₱ 2,000,000.00. Annual operation and maintenance is ₱ 800,000, other expenses cost ₱ 100,000 per year. The life of the power plant is 15 years; salvage value at the end of life is ₱ 200,000; annual taxes and insurances, 6% of first cost; and interest rate is 15%. Determine if the power plant is justifiable using: a. Rate of Return Method b. Annual Worth Method c. Present Worth Method d. Future Worth Method