A piece of equipment is purchased for $13,000. It is expected to last 5 years and has a salvage value of $5,000. At i-5%,what is the annual capital cost of that piece of equipment? O $2.097.80 O $1.734.43 $2.203.92
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- 2. A certain company is considering two types of machine for its operation. The data are as follows: Machine A First cost P150,000 Life 4 yrs Salvage value P15,000 Annual operating cost P48,000 Annual taxes P4,200 Annual repairs P7,200 Machine B First cost P200,000 Life 8 yrs P10,000 Salvage value Annual operating cost P32,000 Annual taxes P7,200 Annual repairs P4,200 If money is worth 12% compounded annually, compute the difference of the present worth of the two machines.1. A certain company is considering two types of machine for its operation. The data are as follows: Machine A First cost P150,000 Life 4 yrs Salvage value P15,000 Annual operating cost P48,000 Annual taxes P4,200 Annual repairs P7,200 Machine B First cost P200,000 Life 8 yrs P10,000 Salvage value Annual operating cost P32,000 Annual taxes P7,200 Annual repairs P4,200 If money is worth 12% compounded annually, compute the difference of the annual worth of the two machines.Question 31 4) In order to make a replacement decision, a firm calculated the equivalent annual cost of owning an asset as follows: Replacement Period Salvage Value EAC Capital Costs Annual Repair EAC Repair Costs Costs 1 $1420 $1,287 2 $1,102 $1,082 $400 $189 3 $910 $976 S600 $298 4 S795 $812 S800 $437 O a. in 4 years O b. in 3 years Oc.in 1 year O d. in 2 years
- Given the two machines’ data Machine A Machine B First Cost P8,000.00 P14,000.00 Salvage value 0 2,000.00 Annual operation 3,000.00 2,400.00 Annual maintenance 1,200.00 1,000.00 Taxes and insurance 3% 3% Life, years 10 15 Money is worth at least 16% Using equivalent uniform annual cost method, determine the value of alternative A and alternative B: note:round off final answer to 2 decimal ANSWER for ALTERNATIVE A: ANSWER for ALTERNATIVE B:A $40,000 machine will be purchased by a company whose interest rate is 12% APR, compounded daily. The installation cost is $5.000 and disposal costs are insignificant. If needed, use an MARR to 2 decimal places. Algebraic signs matter! ΕΟΥ MV(N), $ O&M, $/yr. 4 1 30,000 years 10,000 2 -23,306 dollars, $ 24,000 13,500 b. What is the associated EUAC (TAW) for the ESL? -24,872 dollars, $ 3 21,000 16,000 4 a. Based on the problem data, what is the economic service life, ESL, of the machine? 17,500 17,000 5 10,000 21,000 c. If the machine is kept in service to the ESL calculated in part a, what is the TAW for using the machine in EOY 1?BASED ON ESTIMATES THE DATA FOR TWO TYPES OF BRIDGES WITH DIFFERENT LIVES ARE AS FOLLOWS. IFTHE MINIMUM RATE OF RETURN IS 9%, DETERMINE W/C PROJECT IS MORE DESIRABLE. TIMBER BRIDGE STEEL BRIDGEFIRST COST P 50,000.00 P 140,000.00SALVAGE VALUE 2,000.00 10,000.00LIFE IN YEARS 12 36ANNUAL MAINTENANCE 6,000.00 2,500.00EVALUATE USING:A.) THE ANNUAL COST METHODB.) PRESENT WORTH COST METHODC.) RATE OF RETURN METHOD
- . A manager has been presented with two proposals for automating a production process. Proposal A involves an initial cost of $15,000 and an annual operating costof $2,000 per year for the next 4 years. Thereafter, the operating cost is expected to increase by $100 per year. This equipment is expected to have a 10-year life with no salvage value.Proposal B requires an initial investment of $28,000 and an annual operating cost of $1,200 per year for the first 3 years. Thereafter, theoperating cost is expected to increase by $120 per year. This equipment is expected to last for 20 years and will have a $2,000 salvage value. If the company's minimum attractive rate of return is 10%, which proposal should be accepted on the basis of present worth analysis?Machines that have the following costs are under consideration for a new manufacturing process. Compute the Equivalent Annual Worth with an interest rate of 8%, compounded semiannually. The machine last 4 years First cost $72,000 Semiannual Operating cost: $6,000 Semiannual incomes: $18,000 Salvage value: $9,000 O EAW $7.730 b. EAW $2,285 OCEAW $21,745 Od. EAW $318Available Oct 1 at 10:30am - Oct 4 at 9:30pm 3 days The consolidated oil company must install antipollution equipment in a new refinery to meet federal air legislation. Two types of equipment are being considered, which will have investment and annual operating costs as follows; Equipment A C Investment P600,000 P760,000 P1,240,000 P1,600,000 Power 68,000 68,000 120,000 126,000 Labor 40,000 45,000 65,000 50,000 Maintenance 660,000 600,000 420,000 370,000 Taxes and Insurance 12,000 15,000 25,000 28,000 Assuming an economic life of 10 years for each type, no salvage value, and that the company wants a before-tax return of 20 % on its capital, determine which alternative should be purchased using the following economic methods; a) Rate of return method. b) Annual cost method c) Present worth method d) Equivalent uniform annual cost method
- 5. A small branch office of a contracting company is planning to purchase a new laser printer. Three vendors have supplied cost, useful life, and estimated salvage value data, shown in the following table. The MARR is 12%. Investment (first) cost Annual service cost Salvage value Useful life A $800 $180/yr $200 5 years Laser printer B $1,400 $150/yr $825 5 years C $900 $170/yr $100 5 years Draw cash flows for these alternatives. If the expected annual saving in labor is $500 regardless of which machine is purchased, what are the annual equivalent values of these alternatives.A small town is considering two potential alternatives for a garbage collection system. The following cost data has been compiled. If the interest rate is 6%, Compute the AB /AC ratio. Year System A System B 0 -$250,000 -$375,000 1-30 20,000 32,000 30 40,000 50,000 O 1.34 1.09 0.96 ○ 2.27A certain operation is now performed by hand, the labor cost per unit is P 64 and annual fixed charge for tool use is P 10,000. A machine that is considered for this job will coast P 240,000, and have a salvage value of P 10,000 at the end of its 6 - year life. With it labor cost is P 22 per unit and annual fixed charge is P 20,000. At what number of units per year, at zero interest, will the cost of the two methods break even?