The replacement of a planning machine is being considered by the Reardorn Furniture Company. (There is an indefinite future need for this type of machine.) The best challenger will cost $30,000 for installation and will have an estimated economic life of 11 years and a $2,000 MV at that time. It is estimated that annual expenses will average $15,500 per year. The defender has a present BV of $6,000 and a present MV of $3500. Data for the defender for the next three years are given below. Using a before-tax interest rate of 10% per year, make a comparison to determine whether it is economical to make the replacement now. Year MV at End of BV at End of Expenses during Year Year the Year $-1,500 $4,500 $18,000 - 1,750 -2,000 3,000 25,000 1,500 32,000 Click the icon to view the intereat and annuity table for discrete compounding when i 10% per year. Fill in the table for the EUAC values for the defender for years 1-3. (Round to the nearest dollar.) Year EUAC 25350 $24755 3 25758

The replacement of a planning machine is being considered by the Reardorn Furniture Company. (There is an indefinite future need for this type of machine.) The best challenger will cost $30,000 for installation and will have an estimated economic life of 11 years and a $2,000 MV at that time. It is estimated that annual expenses will average $15,500 per year. The defender has a present BV of $6,000 and a present MV of $3500. Data for the defender for the next three years are given below. Using a before-tax interest rate of 10% per year, make a comparison to determine whether it is economical to make the replacement now. Year MV at End of BV at End of Expenses during Year Year the Year $-1,500 $4,500 $18,000 - 1,750 -2,000 3,000 25,000 1,500 32,000 Click the icon to view the intereat and annuity table for discrete compounding when i 10% per year. Fill in the table for the EUAC values for the defender for years 1-3. (Round to the nearest dollar.) Year EUAC 25350 $24755 3 25758

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 4E

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The replacement of a planing machine is being considered by the Reardorn Furniture Company. (There is an indefinite future need for this type of machine.) The best challenger will cost $30,000 for installation and will have an estimated economic life of 12 years and a $2,000 MV at that time. It is estimated that annual expenses will average $16,000 per year. The defender has a present BV of $6,000 and a present MV of $4,000. Data for the defender for the next three years are as follows: MV at End of BV at End of Expenses during the Year Year Year Year $3,000 2,500 $4,500 3,000 1,500 $20,000 25,000 30,000 1 2 3 2,000 Using a before-tax interest rate of 15% per year, make a comparison to determine whether it is economical to make the replacement now.
An $80,000 baling machine for recycled paper was purchased by the XYZ company two years ago. The current MV of the machine is $50,000, and it can be kept in service for seven more years. MARR is 12% per year and the projected net annual receipts (revenues less expenses) and end-of-year market values for the machine are shown below. When is the best time for the company to abandon this project? END OF YEAR 1 2 3 4 5 6 7 Net annual receipts $20,000 $20,000 $18,000 $15,000 $12,000 $6,000 $3,000 Market value 40,000 32,000 25,000 20,000 15,000 10,000 5,000
An engineer calculated the AW values shown for retaining a presently owned machine additional years. A challenger has an ESL of 4 years with AW = $-60,000 per year. Assuming all future costs remain the same, when should the company replace the defender? The MARR is 12% per year. Assume used machines like the one presently owned will always be available. AW of Defender, 2$ |-77,000 |-63,000 |-58,000 -64,000 -70,000 Years Retained 1 2 3 4 O a) at year 5 O b) at year 4 c) at year 1 d) at year 3
: A machine was purchased and installed 6 years ago for $50000 with a useful life of 10 years. The salvage value is now $5500 and decreasing at a rate of $500 per year. The machine has a maintenance cost of $2000 per year. Assuming a 12.4% MARR, should the company replace the machine this year with a potential new machine that has a EUAC of $3000 per year? (show your work)
From the data shown, determine the ESL of the challenger. Years Retained 1 2 3 4 5 AW of the Defender, $ -145,000 -106,000 -95,000 -93,000 -96,000 a) n = 2 years b) n = 1 year c) n = 3 years d) n = 4 years e) n = 5 years AW of the Challenger, $ -136,000 -126,000 -99,000 -95,000 -98,000
An engineer calculated the AW values shown for retaining a presently owned machine additional years. A challenger has an ESL of 4 years with AW = $-60,000 per year. Assuming all future costs remain the same, when should the company replace the defender? The MARR is 12% per year. Assume used machines like the one presently owned will always be available. AW of Defender, 24 -77,000 -63,000 Years Retained 1 12 -58,000 -64,000 -70,000 13 4 a) at year 5 b) at vear 2 always be available. AW of Defender, 2$ |-77,000 -63,000 -58,000 -64,000 -70,000 Years Retained 3 4 15 O a) at year 5 b) at year 2 c) at year 1 d) at year 4 e) at year 3
A small high-speed commercial centrifuge has the following net cash flows and abandonment values over its useful life. The firm's MARR is 8% per year. Determine the optimal time for the centrifuge to be abandoned if its current MV is $8.500 and it won't be used for more than five years. End of Year 3 $1,700 $1,700 $4,100 5,300 $1,700 Annual revenues less expenses Abandonment value of machine" $6,200 "Estimated MV Click the icon to view the interest and annuity table for discrete compounding when MARR 8% per year. 4 $1,700 $2,100 5 $1,700 0 CTC The centrifuge should be retained for year(s) before abandonment. (Round to the nearest whole number. Type O if the centrifuge should be abandoned immediately)
Anew forklift truck will require an investment of $30,000 and is expectedto have end-of-year market values and annual expenses as shown in the Table below.If MARR (before tax) is 10% per year, Önd the Economic Service Life of the truck.Market Value Annual ExpensesEnd of year at end of year during year1 $22,500 $3,0002 $16,875 $4,5003 $12,750 $7,0004 $9,750 $10,0005 $7,125 $13,000 please dont use excell
A replacement study is to be performed on certain pressing equipment in an industrial laundry. The challenging asset has a computed AW of –$41,000 at i = 15% per year for its anticipated 10-year life. The defender can be sold now for $32,000 or kept for a maximum of 4 more years. If kept, the data below will apply to the defender. Additional years retained Operating Cost, $ EOY Salvage value, $ 1 34,000 28,000 2 36,000 22,000 3 38,000 15,000 4 40,000 5,000 a. In what year should the company replace the existing equipment with the challenger, assuming existing equipment can be replaced indefinitely with similar used equipment having the same AW as that currently used. (now, 4 years from now, 3 years from now, 2 years from now) b. What is the minimum economic life of the defender? (1 year, 4 years, 3 years, 2 years)
8 years ago a company installed a robot that today has a market value of $ 60,000 and each year it drops $ 2000. For example, at the end of the first year the market value will be $ 58,000 and so it continues to decline. Maintenance costs for the next 4 years are estimated at $ 3000 this year and increasing 10% each year. Determine the marginal cost of extending the service for one year, for the next 4 years if the MARR is 12%. Fill in the blanks with the results. Calculate: a) The loss of market value in year 1 is $ b) Loss in interest in year 1 $ c) The Marginal Cost in year 1 is Show all the procedure for your answer thank you
A commercial 3D printer is purchased for $340,000. The salvage value of the printer decreases by 50% each year that it is held. The cost to operate and maintain the machine the first year it is used is $13,000; these costs increase by $6,000 each year. What is the optimal replacement interval and minimum EUAC for the printer, assuming a MARR of 15% is used? Click here to access the TVM Factor Table Calculator. ORI: EUAC*: $ years
A commercial 3D printer is purchased for $280,000. The salvage value of the printer decreases by 40% each year that it is held. The cost to operate and maintain the machine the first year it is used is $12,000; these costs increase by $4,500 each year. What is the optimal replacement interval and minimum EUAC for the printer, assuming a MARR of 13% is used? Click here to access the TVM Factor Table Calculator. ORI: EUAC*: $ years Carry all interim calculations to 5 decimal places and then round your final answers to a whole number. The tolerance is ±5 for the EUAC*.