Question

Using Microsoft Excel:

1. A machine will cost $50,000 to purchase. Annual operating cost will be $3,000. This machine will save $15,000 per year in labor costs. The salvage value after 5 years will be $10,000. Calculate the machine’s equivalent uniform annual worth (EUAW) for the interest rate of 8%.

2. The maintenance cost for a generator have been recorded over its five year life. Calculate EUAC at 8 percent per year.

Year |
1 |
2 |
3 |
4 |
5 |

Cost |
$1100 |
1500 |
1300 |
1900 |
2200 |

Thank you

Answer #1

Q1. | |||||

Initial investmente | -50000 | ||||

Annual operating cashflows: | |||||

Annual savings | 15000 | ||||

Less: Annual ccost | 3000 | ||||

Annual Cashflows | 12000 | ||||

Multiply: Annuity PVF at 8% | 3.99271 | ||||

present value of inflows | 47912.52 | ||||

Present value of salvage (10000*0.680583) | 6805.83 | ||||

Net present value | 4718.35 | ||||

Divide: Annuity PVF | 3.99271 | ||||

EUAW | 1181.741 | ||||

Q2. | |||||

Year | Cashflows | PVF at 8% | Present Value | ||

1 | -1100 | 0.925926 | -1018.52 | ||

2 | -1500 | 0.857339 | -1286.01 | ||

3 | -1300 | 0.793832 | -1031.98 | ||

4 | -1900 | 0.73503 | -1396.56 | ||

5 | -2200 | 0.680583 | -1497.28 | ||

Net present value | -6230.35 | ||||

Divide: Annuity PVF | 3.99271 | ||||

EUAC | -1560.43 | ||||

Using Microsoft Excel functions:
1. A machine will cost $50,000 to purchase. Annual operating
cost will be $3,000. This machine will save $15,000 per year in
labor costs. The salvage value after 5 years will be $10,000.
Calculate the machine’s equivalent uniform annual worth (EUAW) for
the interest rate of 8%.

The initial cost of a new machine is 10, 000. the annual
maintenance cost is 2000 for the first two years, then increases
1000 every year after that. The machine has 10 years useful life
with salvage value of 4000. Calculate EUAC for keeping the
machine

If the owner earns 6% interest on her investment determine the
equivalent annual cost of owning an SUV with the following costs:
(EOY = end of year)
Initial down payment = $2200
Annual payments = $5500, EOY1 –
EOY4
Prepaid insurance = $1500, growing 6%
annually
Gas and oil, and minor maintenance =
$2000 growing 8% annually.
Replacement tires = $750 at EOY4 and
$800 at EOY8
Major maintenance = $2400 at EOY5
Salvage value = $3750 at EOY9

Ms. Child is considering the purchase of a new food packaging
system. The system costs $221,358. Ms. Child plans to borrow
one-third of the purchase price from a bank at 4.5% per year
compounded annually. The loan will be repaid using equal, annual
payments over a 7-year period. The system is expected to last 15
years and have a salvage value of $22,445 at that time. Over the 15
year period, Ms. Child expects to pay $987 per year for...

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one-third of the purchase price from a bank at 4.5% per year
compounded annually. The loan will be repaid using equal, annual
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YEAR | Maintenance Cost
1 | $100
2 | $200
3 | $300
4 | $400
What is the equivalent uniform annual maintenance cost for this
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Exercise 6.4: Ajax Corporation would like to purpose a
machine for $375,000 with a life span of 10 years.
They estimate the salvage value to be 6% of the initial machine
cost. If other operating costs are estimated
to be $32,500 for the first year and increasing by 10% each year,
what are the capital recovery cost
and the equivalent uniform annual cost (EUAC) for total costs? The
interest the company uses to justify their
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A corporate jet costs $1,350,000 and will incur $200,000 per
year in fixed cost (maintenance, …) and $277 per hour variable cost
(fuel, …). The jet will be operated 1200 hours per year for 5 years
and then sold for $650,000. The jet revenues $1,000 per hour. The
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Determine the Equivalent Uniform Annual Cost (EUAC) of the
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costing $4,000 with a life of 10 years and a salvage value of $300
(at year 10). Its operating expenses are $500 per years and your
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a. $1208
b. $1191
c.$930
d.$900
e. None of these are correct.

PLEASE SOLVE NOT USING EXCEL OR A TABLE
A machine costs $750,000 to purchase and will produce $250,000
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sell it for scrap for which it expects to receive $30,000. The
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