Question

Two types of power converters are being considered for a specific application. You want to make...

Two types of power converters are being considered for a specific application. You want to make a comparison using a 15 percent interest rate and you have the following information:
Alternative
Alpha
Omega
Purchase price
$ 10,000
$ 20,000
Estimated useful life
5 years
9 years
Residual value
$ 1000
$ 5000
Annual cost of operation
$ 2,600
$ 1,300
to. Determine the annual equivalent cost of both alternatives. (10pts)
b. Using a useful life of 6 years, determine the present value of both alternatives if the residual value of alpha after one year of use is $ 8,000 and the residual value of Omega after 6 years of use is $ 8,500.
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

PAGE 1

PAGE 2

PAGE 3

PAGE 4

Since it is not very clear in the question for Alpha that how many years replacement cycle is to be considered, I have considered two scenarios, one in which the replacement cycle is of 1 year only; and the other with six years replacement cycle using appropriate assumptions as mentioned above.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Two types of power converters are being considered for a specific application. You want to make...
Two types of power converters are being considered for a specific application. You want to make a comparison using a 15 percent interest rate and you have the following information: Alternative Alpha Omega Purchase Price 10,000 20,000 Estimate useful life 5 years 9 years Salvage Value 1,000 5,000 Anual operation cost 2,600 1,300 a. Determine the annual equivalent cost of both alternatives. b. Using a useful life of 6 years, determine the present value of both alternatives if the residual...
Two types of earth moving equipment which perform the same service are being considered for purchase....
Two types of earth moving equipment which perform the same service are being considered for purchase. Type A has a first cost of $25000, an estimated life of 8 years, annual operating cost of $3000, and an estimate salvage value of $4000. Type B has a first cost of $35000, an estimated life of 12 years, annual operating cost of $3200, an estimated salvage value of $5500. In addition type B will require a major overhaul costing $ 5000 at...
Two products being considered for purchase. Product 1 has an initial cost of $25,000, an estimated...
Two products being considered for purchase. Product 1 has an initial cost of $25,000, an estimated life of 8 years, annual operating cost of $3000, and an estimate salvage value of $4000. Product 2 has an initial cost of $35,000, an estimated life of 12 years, annual operating cost of $3200, an estimated salvage value of $5500. Plus, product 2 will require a major overhaul costing $ 5000 at the end of the sixth year. Use an interest rate of...
Revision of Depreciation Equipment with a cost of $379,700 has an estimated residual value of $40,700,...
Revision of Depreciation Equipment with a cost of $379,700 has an estimated residual value of $40,700, has an estimated useful life of 15 years, and is depreciated by the straight-line method. a. Determine the amount of the annual depreciation. $ b. Determine the book value after 5 full years of use. $ c. Assuming that at the start of the year 6 the remaining life is estimated to be 14 years and the residual value is estimated to be $39,900,...
Two alternative piping schemes are being considered by a water treatment facility. Head and horsepower are...
Two alternative piping schemes are being considered by a water treatment facility. Head and horsepower are reflected in the hourly cost of operation (information not needed for this problem). On the basis of a 10-year life and an interest rate of 12%, what is most nearly the number of hours of operation per year at which Alternative B becomes more cost efficient? Alternative A Alternative B Pipe diameter 4 in 6 in Head loss for required flow 48 ft 26...
Equipment with a cost of $649,900 has an estimated residual value of $74,800, has an estimated...
Equipment with a cost of $649,900 has an estimated residual value of $74,800, has an estimated useful life of 27 years, and is depreciated by the straight-line method. a. Determine the amount of the annual depreciation. $ b. Determine the book value after 12 full years of use. $ c. Assuming that at the start of the year 13 the remaining life is estimated to be 21 years and the residual value is estimated to be $73,000, determine the depreciation...
Equipment with a cost of $423,100 has an estimated residual value of $48,700, has an estimated...
Equipment with a cost of $423,100 has an estimated residual value of $48,700, has an estimated useful life of 32 years, and is depreciated by the straight-line method. a. Determine the amount of the annual depreciation. $ b. Determine the book value after 19 full years of use. $ c. Assuming that at the start of the year 20 the remaining life is estimated to be 20 years and the residual value is estimated to be $40,800, determine the depreciation...
Two mutually exclusive diesel generators are considered for purchase by a power generation company. Information relevant...
Two mutually exclusive diesel generators are considered for purchase by a power generation company. Information relevant to compare the alternatives is summarized below: Generator A Generator B Capital investment $100,000 $80,000 Market value at the end of service life $35,000 $10,000 Annual fuel and maintenance expenses $3,000 $5,000 Service life 10 years 10 years Use the IRR method to determine the better machine to be purchased. The MARR is 10% per year.
Revision of Depreciation Equipment with a cost of $492,800 has an estimated residual value of $44,800,...
Revision of Depreciation Equipment with a cost of $492,800 has an estimated residual value of $44,800, has an estimated useful life of 32 years, and is depreciated by the straight-line method. a. Determine the amount of the annual depreciation. $fill in the blank 1 b. Determine the book value after 18 full years of use. $fill in the blank 2 c. Assuming that at the start of the year 19 the remaining life is estimated to be 19 years and...
On Jan 1, 2017, Hudson leased a construction crane to Omega, Inc. for a nine year...
On Jan 1, 2017, Hudson leased a construction crane to Omega, Inc. for a nine year period at which time possession of the leased asset will revert back to Hudson. the cost and the fair value of the cranes is $420,000 and its expected useful life is ten years. Hudson expects a residual value of 20,000 for the equipment, but Omega does not guarantee any specific amount. Equal Payments under the lease are 60,000 and are due on Jan 1st...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT