ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 28P
(a)
To determine
To construct:A choice table for interest tables from 0% to 100%
(b)
To determine
To select:The best alternative at MARR of 12%
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
You are being asked to select a piece of machinery for the company you work for.
Operating costs are an important criteria when selecting what machinery would be
the best choice.
What is the EUAW (Equivalent Uniform Annual Worth) of this investment that
costs $59,900, has annual benefits of $8,343/year, annual costs of $2,450/year,
and a disposal cost of $4,300 at the end of its useful life? It has a useful life of 12
years. Use a 10% MARR.
Two numerically controlled drill presses are being considered by the production department of Zunni's Manufacturing; one must be
selected. Comparison data is shown in the table below. MARR is 10%/year.
Drill Press T Drill Press M
Click here to access the TVM Factor Table Calculator
Part a
* Your answer is incorrect.
Initial Investment
Estimated Life
Estimated Salvage Value
Annual Operating Cost
Annual Maintenance Cost
What is the future worth of each drill press?
Drill Press T: $
Drill Press M: $
40000
60000
$20,000
10 years
$5,000
$12,000
$2,000
$30,000
10 years
$7,000
$6,000
$4,000
Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±20.
A design change being considered by Mayberry, Inc., will cost $6,000 and will result in an annual savings of $1,000 per year for the 6-year life of the project. A cost of $2,000 will be avoided at the end of the project as a result of the change. MARR is 8%/yr. Solve, a. What is the internal rate of return of this investment? b. What is the decision rule for judging the attractiveness of investments based on internal rate of return? c. Should Mayberry implement the design change?
Chapter 8 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 8 - Prob. 1QTCCh. 8 - Prob. 2QTCCh. 8 - Prob. 3QTCCh. 8 - Prob. 4QTCCh. 8 - Prob. 5QTCCh. 8 - Prob. 1PCh. 8 - Prob. 2PCh. 8 - Prob. 3PCh. 8 - Prob. 4PCh. 8 - Prob. 5P
Ch. 8 - Prob. 6PCh. 8 - Prob. 7PCh. 8 - Prob. 8PCh. 8 - Prob. 9PCh. 8 - Prob. 10PCh. 8 - Prob. 11PCh. 8 - Prob. 12PCh. 8 - Prob. 13PCh. 8 - Prob. 14PCh. 8 - Prob. 15PCh. 8 - Prob. 16PCh. 8 - Prob. 17PCh. 8 - Prob. 18PCh. 8 - Prob. 19PCh. 8 - Prob. 20PCh. 8 - Prob. 21PCh. 8 - Prob. 22PCh. 8 - Prob. 23PCh. 8 - Prob. 24PCh. 8 - Prob. 25PCh. 8 - Prob. 26PCh. 8 - Prob. 27PCh. 8 - Prob. 28PCh. 8 - Prob. 29PCh. 8 - Prob. 30PCh. 8 - Prob. 31PCh. 8 - Prob. 32PCh. 8 - Prob. 33PCh. 8 - Prob. 34PCh. 8 - Prob. 35PCh. 8 - Prob. 36PCh. 8 - Prob. 37PCh. 8 - Prob. 38PCh. 8 - Prob. 39PCh. 8 - Prob. 40PCh. 8 - Prob. 41PCh. 8 - Prob. 42PCh. 8 - Prob. 43PCh. 8 - Prob. 44PCh. 8 - Prob. 45P
Knowledge Booster
Similar questions
- Carlisle Company has been cited and must invest in equipment to reduce stack emissions or face EPA fines of $20,500 per year. An emission reduction filter will cost $75,000 and have an expected life of 5 years. Carlisle's MARR is 10%/year. Part a What is the future worth of this investment? $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is £10.arrow_forwardCraig Nuts Inc. will need to invest in a new nut cracking machine. The plant engineer has gathered the following data regarding the apparent best option. Calculate the future value of the alternative if the MARR is equal to 7% • First Cost $250,000 · Annual Benefits $73,000 the first year and decreasing by $1,200 each year thereafter · Annual O & M (Operation and Maintenance) Costs $28,000 the first year and increasing by $1,600 each year thereafter • Salvage Value 42,000 · Useful Life 6 years a. The Net Future Worth of this investment = $ Blank 1 b. Is this a good investment (type only if Yes or No) = Blank 2arrow_forwardA city is spending $20.1 million on a new sewage system. The expected life of the system is 50 years, and it will have no market value at the end of its life. Operating and maintenance expenses for the system are projected to average $0.5 million per year. If the city's MARR is 6% per year, what is the capitalized worth of the system? The study period is 100 years. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 6% per year. The capitalized worth of the system is $ million. (Round to two decimal places.)arrow_forward
- Two numerically controlled drill presses are being considered by the production department of Zunni's Manufacturing; one must be selected. Comparison data is shown in the table below. MARR is 10%/year. Drill Press T Drill Press M Initial Investment Estimated Life Estimated Salvage Value Annual Operating Cost Annual Maintenance Cost Click here to access the TVM Factor Table Calculator $20,000 10 years $5,000 $12,000 $2,000 $30,000 10 years $7,000 $6,000 $4,000arrow_forwardIf the company's MARR is known to be 10%, is the investment justified?arrow_forwardThe Larkspur Furniture Company needs a new grinder. Compute the present worth for these mutually exclusive alternatives and identify which you would recommend given i = 6% per year. Larkspur uses a 10-year planning horizon.arrow_forward
- You are planning to purchase equipment that costs Rs. 30,000 and is expected to last 12 years with a Rs. 3,000 salvage value. The annual operating expenses are expected to be Rs. 9,000 for the first 4 years but owing to decreased use, the operating costs will decrease by Rs. 400 per year for the next 8 years. MARR is 20%. Approximately what will the present worth of this investment be? Select the value closest to your answer a) Rs. 61,000 b) Rs. 67,000 c) Rs. 72,000 d) Rs. 75,000arrow_forwardCarlisle Company has been cited and must invest in equipment to reduce stack emissions or face EPA fines of $23,500 per year. An emission reduction filter will cost $85,000 and have an expected life of 5 years. Carlisle's MARR is 10%/year. Part a Your answer is incorrect. What is the future worth of this investment? $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±10.arrow_forwardCompany X is considering the purchase of a helicopter for connecting services between their base airport and the new inter-county airport being built about 30 miles away. It is believed that the chopper will be needed only for 6 years until the Rapid Transit Connection is phased in. The estimates on two types of helicopters under consideration, The Whirl 2 B and The ROT 8, are given below: The Whirl 2 B First Cost Annual Maintenance Salvage Value Useful life in years $95,000 $3,000 $12,000 The ROT 8 $120,000 $9,000 $25,000 6 3 Assuming that the Whirl 2B will be available in the future with identical costs, what is the annual cost advantage of selecting The Whirl 2B ? (Use an interest rate of 10 %) A. cost more than $4,000 C. cost between $4,000 and $3,000 B. save between $3,000 and $2000 D. save more than $4,000arrow_forward
- One of the mutually exclusive alternatives below must be selected. Base your recommendation on A(Sauer-Glock) cash flows when the MARR = 8% per year. Q Q Q 0 P ΕΟΥ 10 P Glock 40 The IRR on A(Sauer-Glock) is %. (Round to two decimal places.) 20 OU C 2P ΕΟΥ 10 Sauer 45 P/4 1 20arrow_forwardEmpire Limited is trying to decide between two machines which are necessary in their manufacturing facility. Data concerning the two machines are presented below. If the company has a minimum attractive rate of return (MARR) of 10%, which machine should be chosen? Use co-terminated assumption (5 years) and compare using Present Worth Method. Note: Show final answer to the nearest WHOLE NUMBER Answer the following: a. The Present Worth of Alternative A is = $ Blank 1 b. The Present Worth of Alternative B is = $ Blank 2 c. Choose Alternative (Type only A or B) = Blank 3arrow_forwardIt is proposed to place a cable on an existing pole line along the shore of a lake to connect two points on opposite sides. Which is more economical? Use future worth method and present worth method.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education