ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Chapter 7, Problem 52P
To determine

The calculation of interest rate.

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J&M Manufacturing plans on purchasing a new assembly machine for $30,000 to automate one of its current manufacturing operations. It will cost an additional $5,500 to have the new machine installed. With the new machine, J&M expects to save $11,000 in annual operating and maintenance costs. The machine will last five years with an expected salvage value of $6,000.   a. How long will it take to recover the investment (plus installation cost)?   The payback period is _______years. (Round up to the nearest whole number.)   b. If J&M's interest rate is known to be 13%, determine the discounted payback period.   The discounted payback period is _______years. (Round up to the nearest whole number.)
At 6%, find the capitalized cost of a bridge whose cost is P250M and life is 20 years, if the bridge must be partially rebuilt at a cost of P100M at the end of each 20 years. The maintenance cost for a sewing machine this year is expected to be P500. The cost will increase P50 each year for subsequent 9 years. The interest is 8%. What is the approximate present worth of maintenance for the machine over the full 10 year period?
A company is considering establishing a new machine to automate a meatpacking process. The machine will save $59,350 in labor annually. The machine can be purchased for $271,296 today and will be used for 8 years. It has a salvage value of $11,071 at the end of its useful life. The new machine will require an annual maintenance cost of $9,594. The corporation has a minimum rate of return of 9.4%. Calculate the NPW.

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ENGR.ECONOMIC ANALYSIS

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