A piece of equipment has an initial cost of $125,000. The annual O&M costs are $31,000 and increase $1000 per year. The annual revenue is $45,000 and increase $1,500 per year. The equipment has a life span of 8 years and a salvage value of $30,000. Based on a MARR of 5%, determine the following: a. If the project is viable based on Net Present Worth. b. Determine the amount the annual revenue has to be increased to make the project viable. c. Determine the amount the salvage value has to increase to make the project viable.

A piece of equipment has an initial cost of $125,000. The annual O&M costs are $31,000 and increase $1000 per year. The annual revenue is $45,000 and increase $1,500 per year. The equipment has a life span of 8 years and a salvage value of $30,000. Based on a MARR of 5%, determine the following: a. If the project is viable based on Net Present Worth. b. Determine the amount the annual revenue has to be increased to make the project viable. c. Determine the amount the salvage value has to increase to make the project viable.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

An engineering alternative has a first cost of $12700, and is expected to have net annuai receipts of $1650 for the next 8 years. Assuming no salvage value at the end of the alternative's life, the amount of AW(0%) is: 1. c$500.00 2. C-$500.00 3. C-$62.50 4. C $62.50 5. C NONE.
Three mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given next. The MARR is 20% per year. At the end of the useful life, the investment will be sold A $28,000 Capital Investment Annual Expenses Annual Revenues MV at EOY 10 Useful life 15,000 23,000 B $55,000 13,000 28,000 с $40,000 8,000 10 years 22,000 32,000 6,000 10 years Evaluate all alternatives using PW & IRR method and determine which alternative is preferable. 10,000 10 years
5. The physical life is always greater than all the other "life" factors under replacement analysis. 6. If breakeven analysis is conducted with PW analysis for different MEAS, it doesn't guarantee that the fastest alternative to reach its breakeven point has also the highest equivalent worth.
1. You have been selected to prepare the following analysis of cost alternatives and select the preferred alternative. The study period is 10 years and the MARR=12% per year. A Capital Investment Annual Net- $11,000 $16,000 $20,000 600 900 1000 Revenues Salvage Value 1,000 1,300 2,000 Economic Life 10 yrs 10yrs 10yrs
a company is considering the purchase of a new Lathe, where there are 3 alternative Lathes with brands D, E and F with economic value for each Lathe as follows; Lathe Machine D Lathe Machine E Lathe Machine F Initial Cost (Million Rp) 530 540 480 Maintenance Cost (MillionRp) 90 80 100 Residual Value (Million Rp) 60 130 80 Operating Life 10 10 10 Question: Do a Present Worth Analysis to be able to determine the Alternative chosen from the three Generators with MARR = 13%?
Consider projects X and Y below. If the MARR is 8%, what is the PW of X and Y respectively, given a LCM life analysis? Y FC -15,000 -28,000 AOC -6,000 -9,000 Rebuild cost, -2000 year 4 SV 3,000 5,000 4 8 Group of answer choices -$56,679 and -$78,486 -$53,806 and -$78,486 -$51,757 and -$75,048 -$51,757 and -$74,042
YOUR QUESTION IS: 2. Three mutually exclusive design alternatives are being considered. The estimated sales and cost data for each alternative have been tabulated. The MARR is 20 per year. Annual revenues are based on the number of units sold and the selling price. Annual expenses are based on fixed and variable costs. Determine which selection is preferable based on F W. Confirm your selection by separately checking is preferable using PW. A B Cc Investment cost S 30 000 S 60 000 50 000 Est. units sold year 15 000 20 000 18 000 Unit selling price S 3.50 4.40 4.10 Unit variable cost S 1.00 1.40 1.15 Fixed annual expenses S 15 000 S 30 000 S 26 000 Market value 0 S 20 000 15 000 Useful life 10 yrs 10 yrs 10 yrs
The company you work for wants to start a new project. The initial cost of the project is $120,000. It is expected that revenues will be $18,000 annually. There will be annual operating expenses of $17,000. At the end of the 9-year life of the project, there is a salvage value of $25,000. Use a MARR of 5%. Perform a PW (present worth) analysis. What is the PW of the project? Question 2 Part C: Provide the PW value of the project. Enter your answer in the form: 12345
Two processes are being considered for the production of a machine part. Process 1 requires an equipment cost of P180 000.00, a yearly operating cost of P90 000.00, and has zero salvage value at the end of its 6-year life. Process 2 has corresponding figures of P320 000.00, P72 000.00, P45 000.00 and 9-year life. If the applied MARR is 20%, compare the two processes using PW analysis. (Ans. PT1 = -P693 567.36; PT2= - P718 084.62)- Please use and actual formula NOT AN EXCEL PLEASE. We are students not office workers.
2. Three mutually exclusive design alternatives are being considered. The estimated sales and cost data for each alternative are given on the next page. The MARR is 20% per year. Annual revenues are based on the number of units sold and the selling price. Annual expenses are based on fixed and variable costs. Determine which selection is preferable based on AW. State your assumptions. A в Investment cost Estimated units 60,000 20,000 $50,000 18,000 CLA to be sold/year Unit selling price, $/unit Variable costs, $/unit Annual expenses (fixed) Market value Useful life $4.40 $4.10 $1.00 $1.40 $1.15 $15,000 $30,000 $26,000 $20,000 10 years $15,000 10 years B PUBLICATIO 10 years
2. Three mutually exclusive design alternatives are being considered. The estimated sales and cost data for each alternative have been tabulated. The MARR is 20% per year. Annual revenues are based on the number of units sold and the selling price. Annual expenses are based on fixed and variable costs. Determine which selection is preferable based on F W. Confirm your selection by separately checking is preferable using PW. A В Investment cost $ 30,000 $ 60,000 $ 50,000 Est. units sold/year 15,000 20,000 18,000 Unit selling price $ 3.50 $ 4.40 $ 4.10 Unit variable cost $ 1.00 $ 1.40 $ 1.15 $ 15,000 $ 30,000 $ 20,000 $ 26,000 $ 15,000 Fixed annual expenses Market value Useful life 10 yrs 10 yrs 10 yrs
The Briggs and Stratton Commercial Division designs and manufacturers small engines for golf turf maintenance equipment. A robotics-based testing system with support equipment will ensure that their new signature guarantee program entitled "Always Insta-Start" does indeed work for every engine produced. First cost of equipment AOC per Year Salvage Value Estimated Life Pull System $-1,250,000 $-700,000 $105,000 8 years Push System $-2,350,000 $-500,000 $90,000 8 years Determine the salvage value for the push system that will make the company indifferent to the two systems. Also, MARR = 13% per year. The salvage value for the push system is determined to be $ in $1000 units.