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A: We have given the first cost of the machine P=$2000 Salvage value is zero at any time F=0 for all n…
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A: Given information: Cost of money = 5% Environmental impact statements and safety planning/inspection…
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A: Recovery period for asset of petroleum refineries is 3 to 5 years.
Q: Compare the defender and challenger based on the opportunity-cost?
A: Opportunity cost refers to the given up benefit in the process of getting other benefits.
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A: The annual capital cost can be calculated as follows:
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A: The economic service life of an asset is the period of time in which the asset is useful for the…
Q: When should the eventual salvage value of an asset be estimated?
A: The salvage value is calculated by using the formula is represented as follows: Here, The original…
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A: The annual worth is the net of all the benefits and costs incurred over a one-year period.…
Q: What is meant by the opportunity-cost approach for a replacement study?
A: Replacement Study: It is an economic analysis which involves comparing a facility which already…
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A: i = 4%
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A: here we calculate the miles of use per year does car A become preferable to car B as follows
Q: The X Company plans to produce the product by the suitable way of three proposed methods. Method A…
A: Interest rate = 8% Method A Cost of Machine = $6100 time period = 5 Years Salvage Value = $0…
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A: In economics, productivity is the ratio of output to input, such as labor or capital. For the…
Q: What are the benefits of NPW analysis?
A: Following are the benefits of NPW analysis: The apparent benefit of the net present-value approach…
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A: Given Information Machine Purchased = 80,000Operating cost = 71,000Life = 10 Year Interest rate =…
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A: Correct Answer: Option ‘C’ Working note: Total cost of computer set = 56000 + 4000 = $60000 Life of…
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Q: In a replacement study, the correct value for the first cost of the challenger is:a. the cost when…
A: In a replacement study, the correct value for the first cost of the challenger is
Q: Who doesn't love food trucks? Imagine you are being offered to invest in a food truck as part of a…
A: Given information First cost=$100000 Salvage value=$5000 O& M cost =$5000 Overhaul cost=$20000…
Q: A delivery car had a first cost of $34,000, an annual operating cost of $15,000, and an estimated…
A: Given; First Cost= $34000Annual operating cost= $15000Estimated Salvage value= $5000Life; n=6…
Q: A computer engineer is considering the purchase of a laptop whose operating characteristics are…
A: Fundamentally, engineering economics entails defining, estimating, and evaluating economic…
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A: Present value is defined as the current value of a future sum of money o cash flows given a…
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A: Sl.No Alternative 1 Alternative 2 1 Cost of Maintenance $24000 $28500 2 Life of…
Q: Who doesn't love food trucks? Imagine you are being offered to invest in a food truck as part of a…
A: Given information First cost=$100000 Salvage value=$5000 O& M cost =$5000 Overhaul cost=$20000…
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A: (1) Book value after 15 years using straight line depreciation Solution: FC = 60000 (including 5000…
Q: A new machine can be purchased for $50,000. Its expected useful ife is seven years, with a salvage…
A: An offer is acceptable if AW > 0 and not acceptable if AW < 0.
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- When should the eventual salvage value of an asset be estimated?Compare the defender and challenger based on the opportunity-cost?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
- Show your complete solution. 19. A machine cost 7,350 has a life of 8 years and has a salvage value of 350 at the end of a years. Determine its book value at the end of 4 years using Constant- Percentage of Declining Value.Describe the net future worth of the project?Present Worth of Alternative A (Round off answer to 2 decimal places)
- A business industry has a new product whose sales are expected to be 1.2, 3.5, 7, 5, 3 million units per year over the next 5 years. Production, distribution, and overhead costs are stable at $120 per unit. The price will be $200 per unit for the first two years, and then $180, $160 and $140 for the next three years. The remaining R&D and production costs are $300 million. If the interest rate is 15%, determine whether this business will profit using present worth method. What is the present worth? *A large city in the mid-West needs to acquire a street-cleaning machine to keep its roads looking nice year round. A used cleaning vehicle will cost $85,000 and have a $20,000 salvage value at the end of its five year life. A new system with advanced features will cost $150,000 and have $40,000 market value at the end of its five year life. The new system is expected to reduce labor hours compared with the used system. Current street-cleaning activity requires the used system to operate 8 hours per day for 20 days per month. Labor costs $50 per hour (including fringe benefits), and MARR is 12% per year.a. Find the breakeven percent reduction in labor hours for the new system. b. If the new system is expected to be able to reduce labor hours by 17% compared with the used system, which machine should the city purchase? c. Investigate how sensitive the decision is to 1) changes in the market value of the new system and 2) the productivity improvement of the new system. Graph your results.…Upon purchase of a brandnew asset, the capitalized cost would be different from its replacement value due to? a. Directly attributable costs b. Cost of Capital c. Normal wear and tear from usage d. Cost of illiquidity
- Burns City may build a garbage incinerator on the outskirts of town. Environmental impact statements and safety planning/inspection will cost $21,000 (payable at start of construction). The annual upkeep and operating costs are expected to be $34,000. The new incinerator will save $14 each annually for 24,000 billed customers. Consultants have estimated an annual disbenefit to the surrounding area of $36,500. At the end of a 10-year useful life the incinerator will be dismantled at a cost of $50,000. Using benefit-cost ratio analysis, and assuming a cost of money of 5% what is the maximum that Burns City can pay to build the incinerator?You are considering two alternative machines, Machine A and Machine B, for a manufacturing process. One of the machines, Machine A, costs $40,000 to set up and $6,000 per year to operate, but It must be completely replaced every 7 years, and it has no salvage value. Assuming the cost of capital is 8.7%, what is the equivalent annual cost of the machine?A building supplies distributor purchased a gasoline-powered forklift truck 4 years ago for $8,000. At that time, the estimated useful life was 8 years with a salvage value of $800 at the end of this time. The truck can now be sold for $2,500. For this truck, average annual O&M expenses for year j have been Cj = $2, 000 + $400(j − 1) Now the distributor is considering the purchase of a smaller battery-powered truck for $6,500. The estimated life is 10 years, with the salvage value decreasing by $600 each year. Average annual O&M expenses are expected to be $1,200. If a MARR of 10% is assumed and a 4-year planning horizon is adopted, based on an annual worth cash flow approach should the replacement be made now?