Question

An engineer uses a economic analysis to determine which of two different machines to purchase. The machine is capable of performing the task. Assume the minimum attractive rate of return of 4% compounded semiannually. What is the annual worth of the machine?

Initial cost = $11,000

Estimated life = 10 years

Salvage value = $3,500

Semiannual maintenance cost = $475

Semiannual income = 2,475

Answer #1

Semi-Annual inflows | 2475 | |||

Less: Operating cost | 475 | |||

Net inflows | 2000 | |||

Annuity factor (i=2% n=20) | 16.351 | |||

Present value of Inflows | 32702 | |||

Aadd: Present value off salvage | 2355.5 | |||

($ 3500*0.673) | ||||

Total Present value of inflows | 35057.5 | |||

Less: Initial Investment | 11000 | |||

Present worth | 24057.5 | |||

Divide: Annuity factor | 16.351 | |||

Annualised Equivalent cash flows | 1471.317 | |||

Present worth of project: | 24058 | |||

Annualised Equivalent flows: | 1471 | |||

An engineer uses an economic analysis to determine if is worth
to purchase the machine. The rate of return is 6% . What is the
future worth of the machine? Initial cost = $9,000 Estimated life =
8 years Salvage value = 900 Annual maintenance cost = $450 Annual
maintenance income = 2,450 Income gradient = 100

An
engineer uses an economic analysis to determine if is worth to
purchase the machine. The rate of return is 6%. What is the future
worth of the machine?
Initial cost = 9000
Estimated life 8years
Salvage value 900
Annual maintainable cost 450
Annual maintainable income 2450
Income gradient 100

A company is evaluating two different computer systems for
purchase. The company uses a MARR of 4% to evaluate investments.
The information for the two systems is in the following table:
A
B
First Cost
$20,000
$10,000
Annual Maintenance
$5,000
$4,000
Annual Cost Savings
$7,000
$5,000
Salvage Value
$1,300
$1,000
Expected Life
3 years
2 years
Based on present worth analysis, what
is the present worth of system A?
Hints:
1. What do you need to consider when evaluating multiple...

A bridge design firm is performing an economic analysis of two
mutually exclusive designs for a highway overpass. The steel girder
option has an initial cost of $2.04 million, and the concrete
option has an initial cost of $2.5 million. Every 25 years, the
steel bridge must be painted at a cost of $450,000, and all other
maintenance costs are the same for both options. The steel bridge
is expected to last 50 years, and concrete bridge is expected to...

A bridge design firm is performing an economic analysis of two
mutually exclusive designs for a highway overpass. The steel girder
option has an initial cost of $2.04 million, and the concrete
option has an initial cost of $2.5 million. Every 25 years, the
steel bridge must be painted at a cost of $450,000, and all other
maintenance costs are the same for both options. The steel bridge
is expected to last 50 years, and concrete bridge is expected to...

A small aerospace company is evaluating two alternatives: the
purchase of an automatic-feed machine and a manual-feed machine for
a product’s finishing process. The auto-feed machine has an initial
cost of $23,000, an estimated salvage value of $4,400 and a
predicted life of 10 years. One person will operate the machine at
a cost of $12 an hour. The expected output is 8 tons per hour.
Annual maintenance and operating cost is expected to be $3,500.
The manual-feed machine has...

Arc Enterprise is analyzing two machines to determine which one
it should purchase. Whichever machine is purchased will be replaced
at the end of its useful life. The company requires a 14 percent
rate of return and uses straight-line depreciation to a zero book
value over the life of the machine. Machine A has a cost of
$651,000, annual operating costs of $32,000, and a 5-year life.
Machine B costs $472,000, has annual operating costs of $41,000,
and a 3-year...

Pactiv Corp is analyzing two machines to determine which one it
should purchase. Whichever machine is purchased will be replaced at
the end of its useful life. The company requires a 14 percent rate
of return and uses straight-line depreciation to a zero book value
over the life of the machine. Machine A has a cost of $415,000,
annual operating costs of $28,300, and a 4-year life. Machine B
costs $300,000, has annual operating costs of $45,100, and a 3-year...

Which of the following distinguishes scenario analysis from
sensitivity analysis?
a. Scenario analysis only applies to new product development
projects.
b. Sensitivity analysis only applies to new product development
projects
c. Sensitivity analysis involves changing one project variable
at a time while scenario analysis involves changing more than one
project variable at the same time
d. Sensitivity analysis only applies when projects are mutually
exclusive.
3. Which of the following statements is true regarding the
internal rate of return (IRR)?...

Chemalite, Inc. (B) Cash Flow Analysis Bennett Alexander, a
chemical engineer, founded Chemalite, Inc. in late 2002. The
company was set up to manufacture and sell his latest patented
invention, the Chemalite. The first year of operations was
successful, allowing Chemalite's directors to declare a $10,000
dividend at the end of 2004. Exhibit 1 presents the income
statement and balance sheet for the year ended December 31, 2004.
During the meeting with the company shareholders, held in January
2005, Alexander...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 27 minutes ago

asked 30 minutes ago

asked 40 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago

asked 3 hours ago