Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
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Question
Chapter 9, Problem 32FE
To determine
Calculate the present worth.
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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…
Majdy Corporation purchased a machine 5 years ago for JOD 527,000 when it launched product X. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model machine "M1" costing JOD 545,000 or by a new model "M2" machine costing JOD 450,000. Management has decided to buy the model "M2" machine. It has less capacity than the model "M1" machine, but its capacity is sufficient to continue making product X. Management also considered, but rejected, the alternative of dropping product X and not replacing the old machine. If that were done, the JOD 450,000 invested in the new machine could instead have been invested in a project that would have returned a total of JOD 532,000.
1. What is the amount of sunk cost if the decision was to buy model "M2" machine rather than the model "M1" machine?
2. What is the amount of opportunity cost if the decision was to invest in model "M2" machine?
A small high-speed commercial centrifuge has the following net cash flows and abandonment values over its useful life. The firm's MARR is 8% per year. Determine the optimal time for the centrifuge
to be abandoned if its current MV is $8.500 and it won't be used for more than five years.
End of Year
3
$1,700 $1,700
$4,100
5,300
$1,700
Annual revenues less expenses
Abandonment value of machine" $6,200
"Estimated MV
Click the icon to view the interest and annuity table for discrete compounding when MARR 8% per year.
4
$1,700
$2,100
5
$1,700
0
CTC
The centrifuge should be retained for year(s) before abandonment. (Round to the nearest whole number. Type O if the centrifuge should be abandoned immediately)
Chapter 9 Solutions
Engineering Economy
Ch. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4PCh. 9 - Prob. 5PCh. 9 - Prob. 6PCh. 9 - Prob. 7PCh. 9 - A city water and waste-water department has a...Ch. 9 - Prob. 9PCh. 9 - Prob. 10P
Ch. 9 - Prob. 11PCh. 9 - Prob. 12PCh. 9 - Use the PW method to select the better of the...Ch. 9 - Prob. 14PCh. 9 - Prob. 15PCh. 9 - Prob. 16PCh. 9 - Prob. 17PCh. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 21PCh. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Prob. 25PCh. 9 - Prob. 26PCh. 9 - Prob. 27SECh. 9 - Prob. 28SECh. 9 - Prob. 29CSCh. 9 - Prob. 30CSCh. 9 - Prob. 31CSCh. 9 - Prob. 32FECh. 9 - Prob. 33FECh. 9 - Prob. 34FECh. 9 - Prob. 35FECh. 9 - Prob. 36FE
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