ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
expand_more
expand_more
format_list_bulleted
Question
Chapter 13, Problem 16P
To determine
To find:Optimal life for forklift.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Machine A was purchased last year for
$19,500
and had an estimated MV of
$3,500
at the end of its
seven-year
life. Annual operating costs are
$2,100.
The machine will perform satisfactorily over the next
six
years. A salesman for another company is offering a replacement, Machine
B,
for
$13,700,
with an MV of
$1,300
after
six
years. Annual operating costs for Machine B will only be
$1,300.
A trade-in allowance of
$9,600
has been offered for Machine
A.
If the before-tax MARR is
6%
per year, should you buy the new machine?
Machine A was purchased last year for $19,500 and had an estimated MV of $3.500 at the end of its seven year life. Annual operating costs are $2,100. The machine will perform satisfactorily over the next six years. A salesman for another company is offering replacement, Mlachine 0, for $13,.700. with an MV of $1,300 aller six years. Arnual operaling cosls for Machine B will only be $1 300. A trade-in allowance of $9,600 has…
A machine purchased a year ago for $85,000 costs more to operate than anticipated. At the time of the purchase, it was expected to be used for 10 years with annual maintenance costs of $22,000 and a salvage value of $10,000. However, last year, it incurred a cost $38,000, which is expected to escalate to $39,300 this year and increase by $1,300 each year thereafter. The market value is now estimated to be $81,000–$10,000k, where k is the number of years since the machine was purchased. It is now estimated that the machine will be useful for a maximum of 6 more years. A replacement study is to be performed. Determine the values of P, n, AOC for year 6 and S of this defender.
The value of P is $ _______ .
The value of n is_______ years.
The AOC for year 6 is______ .
The value of S is $______ .
A commercial 3D printer is purchased for $ 380,000. The salvage value of the printer decreases by 35% each year that it is held. The cost to operate and maintain the machine the first year it is used is $ 12,500; these costs increase by $ 4,000 each year. What is the optimal replacement interval and minimum EUAC for the printer, assuming a MARR of 10% is used?
Chapter 13 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 13 - Prob. 1QTCCh. 13 - Prob. 2QTCCh. 13 - Prob. 3QTCCh. 13 - Prob. 4QTCCh. 13 - Prob. 5QTCCh. 13 - Prob. 1PCh. 13 - Prob. 2PCh. 13 - Prob. 3PCh. 13 - Prob. 4PCh. 13 - Prob. 5P
Ch. 13 - Prob. 6PCh. 13 - Prob. 7PCh. 13 - Prob. 8PCh. 13 - Prob. 9PCh. 13 - Prob. 10PCh. 13 - Prob. 11PCh. 13 - Prob. 12PCh. 13 - Prob. 13PCh. 13 - Prob. 14PCh. 13 - Prob. 15PCh. 13 - Prob. 16PCh. 13 - Prob. 17PCh. 13 - Prob. 18PCh. 13 - Prob. 19PCh. 13 - Prob. 20PCh. 13 - Prob. 21PCh. 13 - Prob. 22PCh. 13 - Prob. 23PCh. 13 - Prob. 24PCh. 13 - Prob. 25PCh. 13 - Prob. 26PCh. 13 - Prob. 27PCh. 13 - Prob. 28PCh. 13 - Prob. 29PCh. 13 - Prob. 30PCh. 13 - Prob. 31PCh. 13 - Prob. 32PCh. 13 - Prob. 33PCh. 13 - Prob. 34PCh. 13 - Prob. 35PCh. 13 - Prob. 36PCh. 13 - Prob. 37PCh. 13 - Prob. 38PCh. 13 - Prob. 39PCh. 13 - Prob. 40PCh. 13 - Prob. 41PCh. 13 - Prob. 42PCh. 13 - Prob. 43PCh. 13 - Prob. 44PCh. 13 - Prob. 45PCh. 13 - Prob. 46PCh. 13 - Prob. 47PCh. 13 - Prob. 48PCh. 13 - Prob. 49PCh. 13 - Prob. 50PCh. 13 - Prob. 51PCh. 13 - Prob. 52PCh. 13 - Prob. 53PCh. 13 - Prob. 54PCh. 13 - Prob. 55PCh. 13 - Prob. 56P
Knowledge Booster
Similar questions
- one factory manager bought a rare machine for $10 million. It is estimated that the sales value of the machine at the end of the first year will be $3 million and the machine will be worth $500,000 due to the demand by the antique dealers. The maintenance cost is expected to be $300,000 in the first 3 years and double each year thereafter. In this way, the maintenance cost of the 4th year is $600,000, the maintenance cost of the 5th year is $1,200,000, etc. Calculate the economic life of this machine based on a 15% MCVO. A) 7 B) 3 C)12 D) 6 E) 9arrow_forwardAn industrial plant bought a generator set for P89,663. Other expenses including installation amounted to P9,618. The generator set is to have a life of 17 years with a salvage value at the end of life of P6,667. Determine the book value at the end of 9 years by the sinking fund method at 12.36%.arrow_forwardSt. Francis Cooperative purchased a P45 000.00 — pump for its irrigation project. Setup and installation cost amounted to P5000.00. Using the SYD method, economic life and salvage value was initially estimated to be 12 years and P3800.00, respectively. Due to poor maintenance and continuous exposure to the elements, a re-evaluation after five years indicated that the remaining economic life is only four years, with a salvage value of P2500.00. Find the book value of the pump for the seventh year. (Ans. P7865.40)arrow_forward
- A machine that has been used for 8 years has a market value of $2,500 now, which decreases by $100 each year for the next 5 years. Maintenance costs this year are $5k, and for the next 5 years they are estimated at $6k, $7k, $8k and $9k. Determine the marginal cost of extending the service for two years if the MARR is 12%. Answer the questions: a) How much is the loss in market value in year 2? b) How much is the loss in interest in year 2? c) What is the Marginal Cost in year 2? d) If the machine's minimum EUAC is $5,500, when, in years, should the machine be replaced?arrow_forwardCompany X has been contracting its overhauling work to Company Y for$40,000 per machine per year. Company X estimates that by building a $500,000 maintenance facility with a life of 15 years and a salvage value of $100,000 at the end of its life, it could handle its own overhauling at a cost of only $30,000 per machine per year. What is the minimum annual number of machines that Company X must operate to make it economically feasible to build its own facility, assuming an interest rate of 10%?arrow_forwardThree years ago, Witt Gas Controls purchased equipment for $80,000 that was expected to have a useful life of 5 years with a $9000 salvage value. Increased demand necessitated an upgrade costing $30,000 one year ago. Technology changes now require that the equipment be upgraded again for another $25,000 so that it can be used for 3 more years. Its annual operating cost will be $47,000, and it will have a $22,000 salvage after 3 years. Alternatively, it can be replaced with new equipment that will cost $68,000 with operating costs of $35,000 per year and a salvage value of $21,000 after 3 years. If replaced now, the existing equipment will be sold for $9000. Calculate the annual worth of the defender at an interest rate of 10% per year. Answer: $ 54,025 Subject: ENGINEERING ECONOMICS Lesson: Decisions Under Certaintyarrow_forward
- The cost of the equipment is P550,000 and the cost of handling and installation is P28,000. If the book value of the equipment at the end of the 3 year P275,000 and the life of the equipment is assume to be 5 years. Determine the salvage value of this equipment at the end of 5 years.arrow_forwardA 2-year-old injection molding machine was expected to be kept in service for its projected life of 5 years, but a new challenger promises to be more efficient and have lower operating costs. You have been asked to determine if it would be economically attractive to replace the defender now or keep it for 3 more years as originally planned. The defender had a first cost of $300,000, but its market value now is only $100,000. It has chargeable expenses of $120,000 per year and no expected salvage value. To simplify calculations for this problem only, assume that SL depreciation was charged at $60,000 per year, and that it will continue at that rate for the next 3 years. The challenger will cost $420,000, have a 3-year life, and no salvage value. It will have chargeable expenses of $30,000 per year, and it will be depreciated at $140,000 per year (again, using SL depreciation for simplicity for this problem only). Assume a Te of 35%, and an aftertax MARR of 15% per year. Determine (a)…arrow_forwardA machine tool purchased 2 years ago for $40,000 has a market value best described by the relation $40,000 − 3000k, where k is the number of years from time of purchase. Experience with this type of asset has shown that its annual operating cost is described by the relation $30,000 + 1000k. The asset’s salvage value was originally estimated to be $10,000 after a predicted 10-year useful life. Determine the current estimates for P, S, and AOC for a replacement study, assuming it will be kept only 1 more year, which will be the third year of ownership.arrow_forward
- A certain equipment costs P7,000 has an economic life of n years and a salvage value P350 at the end of n years. If the book value at the end of 4 years is equal to P2197.22, compute for the economic life of the equipment using the sum of years digit method.arrow_forwardA company decides to automate a process that will require installing a machine that costs BD8,000 and is expected to save BD2,500 per year. If the economic life of the machine is 10 years, at which time it has a salvage value of BD2,000, and if the MARR is 15%, is it a good decision to buy the machinearrow_forwardAdvanced Electrical Insulator Company is considering replacing a brokeninspection machine, which has been used to test the mechanical strength of electrical insulators with a newer and more efficient one. If repaired, the old machine can be used for another five years although the firm does not expect to realize any salvage value from scrapping it in five years. Alternatively, the firm can sell the machine to another firm in the industry now for $5,000. If the machine is kept, it will require an immediate $1,200 overhaul to restore it to operable condition. The overhaul will neither extend the service life originally estimated nor increase the value of the inspection machine. The operating costs are estimated at $2,000 during the first year and are expected to increase by $1,500 per year thereafter. Future market values are expected to decline by $1,000 per year. The new machine costs $10,000 and will have operating costs of $2,000 in the first year, increasing by $800 per year…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning