Nelson, Inc. is considering investing in new and more efficient equipment The equipment has 10-year life with the first cost of $800,000. The annual operating cost is $40,000 in year one and increases by $20,000 per year. The salvage value expected to be $50,000 and Nelson's MARR is 10%.
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- A company is considering the purchase of a fleet of % ton pickup trucks for their contracting business. The owner is trying to decide whether to purchase the trucks with diesel or gas engines. The company specifies an intermal rate of return on equipment purchases of 6% . The owner estimates the following cash flows of costs for a gas and diesel equipped truck. What is the EUAC of the Diesel Truck? Gas Diesel Purchase Purchase Year Fuel Fuel Maintain Maintain $30,000 $250 $300 $39,000 $6,750 $5,000 $1,000 $5,000 $1,500 1 $500 $6,750 $6,750 2 3 $350 $5,000 4 $400 $6,750 $2,000 $5,000 $2,500 $5,000 $3,000 $5,000 $3,500 $5,000 $4,000 | $5,000 5 6. Note: no need to find the common useful life when using EUAC.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%?Question 3 A project with the following costs are under consideration to determine its profitability. Using the IRR comparison, and an annual MARR of 10% compounded semiannually, determine if the project should be executed First cost $45,000 Semiannual operating cost $10,000 Semiannual income $20,000 Salvage value $20,000 Life in years 4 years Oa. IRR = 17% semiannual Ob. IRR= 18.7% semiannual O IRR = 16.9% semiannual Od. IRR 15.3% semiannual
- The Flynn manufacturing company is undergoing a review by the board of regents for expounding their performance. Three proposals were under strict scrutiny given its investment and corresponding cash flow. If the company desires an MARR=15% for the period 5 years, which from the following proposal will be beneficial for Flynn company? End of year Proposal A Proposal B Proposal C -135000 -160000 -200000 1 24000 43000 60000 2 24000 43000 60000 3 24000 43000 60000 24000 43000 60000 24000 43000 60000 Calculate using Benefit-Cost Ratio Method. ОА. Proposal А О В. Proposal B О С. Proposal C O D. None of these 4-The Flynn manufacturing company is undergoing a review by the board of regents for expounding their performance. Three proposals were under strict scrutiny given its investment and corresponding cash flow. If the company desires an MARR=15% for the period 5 years, which from the following proposal will be beneficial for Flynn company? End of year Proposal A Proposal B Proposal C -135000 -160000 -200000 1 24000 43000 60000 2 24000 43000 60000 3 24000 43000 60000 4 24000 43000 60000 5 24000 43000 60000 Calculate using Benefit-Cost Ratio Method. A. Proposal A B. Proposal B O C. ProposalC O D. None of theseGiven the following two alternatives and using the repeatability assumption and MARR=15%/year, the equation for computing the present worth of vendor B is Vendor A First Cost, $ -15,000 Annual cost, $ per year -3500 Salvage Value, $ 1000 Life, years 3 Vendor B -18000 -3100 2000 4 OPW=18000-18000(P/F,15%, 4)-18000(P/F,15%, 8)+2000(P/F, 15%, 4)+2000(P/F, 15%, 8) +2000 (P/F, 15%, 12)-3100(P/A, 15%, 12) PW=18000-18000(P/F, 15%, 12)+2000(P/F, 15%, 4)+2000 (P/F, 15%, 8)+2000(P/F, 15%, 12)-3100(P/A, 15%, 12) O PW=-18000-18000(P/F,15%, 4) - 18000(P/F,15%, 8) +2000(P/F, 15%, 4)+2000(P/F, 15%, 8) +2000 (P/F, 15%, 12)-3100(P/A, 15%, 12) O PW=-18000(P/F,15%, 4) -18000(P/F,15%, 8) +2000(P/F, 15%, 4)+2000(P/F, 15%, 8) +2000(P/F, 15%, 12)-3100(P/A, 15%, 12)
- A start up business is considering two types of equipment - data are as follows: ΤΥΡE Α TYPE B First Cost P200,000.00 P300,000.00 Annual operating cost 32,000.00 24,000.00 Annual labor cost 50,000.00 32,000.00 Insurance and property taxes 3% 3% Payroll taxes I 4% 4% Estimated life 10 10 The minimum required rate of return is 15%. What is the exact rate of return? ANSWER: Blank 1The Flynn manufacturing company is undergoing a review by the board of regents for expounding their performance. Three proposals were under strict scrutiny given its investment and corresponding cash flow. If the company desires an MARR=15% for the period 5 years, which from the following proposal will be beneficial for Flynn company? End of year Proposal A Proposal B Proposal C -135000 -160000 -200000 1 24000 43000 60000 2 24000 43000 60000 24000 43000 60000 4 24000 43000 60000 24000 43000 60000 Calculate using Benefit-Cost Ratio Method. O A. Proposal A о в. Proposal B O C. Proposal C O D. None of theseA firm is considering the purchase of a new machine to increase the output of an existing production process. If each of these machines provides the same service over their useful lives and the MARR is 15%, Initial Investment Annual Cost Market Value at End of Useful Life Useful Life 5 years 20 years a) Which machine would be selected on the basis of repeatability assumption? b) Using co-terminated assumption with a 5 year study period (compute imputed market value for alternative B), which alternative is preferred? c) If perpetual service life is assumed, which of these alternatives do you recommend? a) Using Repeatability: AWA=$Blank 1 and AWB-$Blank 2 b) Using Co-terminated: AWA-SBlank 3 and AWB=$Blank 4 c) Capitalized Cost: CCA-SBlank 5 and CCB-$Blank 6 Blank 1 Note: For Equivalent Worth, round off your final answer to whole number. For Rate of Return, round off to two decimal places (in percentage). Blank 2 Blank 3 Alternative A $14,000 $14,000 $8,000 Blank 4 Blank 5 Blank 6 Add…
- A company is considering purchasing either machine A or B, given that MARR is 10%, and the company projected sales is 40,000 units. Machine A Machine B $90,000 $39,000 $1100 +.02xunits $600 +0.03xunits Initial cost $70,000 $40,000 $1000+0.03xunit $500+0.05xunit 8 years $15,000 Annual revenues Annual Operation cost Annual Maintenance cost 6 years $10,000 Life span Salvage value Draw the cash fiow diagram for each machine. a. b. Compute ERR for each machine, based on computed ERRS, which machine is to be selected7 Explain the difference between the IRR & ERR methods as explained in the lecture.Q4. [ remaining useful life) are shown in the table below. Assume the MARR is 10% per year. Based on this information, - ] The present worth of the cash flows through year k, PWk for a defender (3- year What is the economic life and the related minimum equivalent uniform annual cost, EUAC, for the defender? a. b. Compute marginal cost, show your calculations and fill the table below. Year(k) Total (marginal) cost PWk EUAC -$14,020 -$28,100 3 -$43,075QUESTION 7 for th below two machines and based on AW analysis which machine we should select? MARR=10%. Machine A First cost, $ Annual cost, $/year Salvage value, $ Life, years 3 Answer the below question: A- the AW for machine A= 25,433 12,199 7,603 Machine B 100,000 7,000 infinite