A special-purpose machine is to be purchased at a cost of $30,000. The following table shows the expected annual operating and maintenance cost and the salvage value for each year of service:
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- Please solve in 30 min i will give you a upvote PROBLEM 2 Karim Inc. calculated the annual cost of owning an asset as follows. EUAC Annual EUAC Replacement Capital Repair Repair Year Costs Costs Costs $1,400 $1,100 1 2 $450 $200 3 $900 $600 $350 4 $800 $800 $400 $700 $1,000 $600 $1,300 $500 $1,600 $450 $600 7 $750 a. When should the company replace the equipment? b. If Karim Inc currently replaces its equipment every year to avoid increasing annual repair costs, how much can the company save annually?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.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
- Question 5 Cost data of a machine is shown in the following table with an annual rate of 12%. Calculate annual worth at end of year 2 M&O cost Retention Yr. Market Value per year O First Cost) 55,000 1 35,000 45.000 2 20,000 47.500 3 15,000 50.000 4 2.000 53.500 O 6a256 O 69209 O R476 O 67.854 Question 6 Use same cost data from last question and 12% annual rate of return. Calculate annual worth at end of Year 3. O 66.765 O 64332 O 67.428 O 66256 D Question 7 Use the same cost data of the machine from the above 2 questions and 12% interest rate per year. What is the ESL of this machine? 01 043. The annual worth method An office supply company has purchased a light duty delivery truck for $15,000. It is anticipated that the purchase of the truck will increase the company’s revenue by $10,000 annually, whereas the associated operating expenses are expected to be $3,000 per year. The truck’s market value is expected to decrease by $2,500 each year it is in service. If the company plans to keep the truck for only 2 years, what is the annual worth of this investment? The MARR = 18% per year! Required information The Briggs and Stratton Commercial Division designs and manufacturers small engines for golf turf maintenance equipment. A robotics-based testing system with support equipment will ensure that their new signature guarantee program entitled "Always Insta-Start" does indeed work for every engine produced. First cost of equipment AOC per Year Salvage Value Estimated Life Pull System $-2,000,000 $-700,000 $110,000 8 years Push System $-2,700,000 $-440,000 $70,000 8 years Determine the salvage value for the push system that will make the company indifferent to the two systems. Also, MARR = 9% per year. The salvage value for the push system is determined to be $ in $1000 units.
- ! Required information The Briggs and Stratton Commercial Division designs and manufacturers small engines for golf turf maintenance equipment. A robotics-based testing system with support equipment will ensure that their new signature guarantee program entitled "Always Insta- Start" does indeed work for every engine produced. First cost of equipment AOC per Year Salvage Value Estimated Life Pull System $-1,550,000 $-620,000 $90,000 8 years Push System $-2,650,000 $-620,000 $50,000 8 years Compare the annual worth of the two systems at MARR = 11% per year. Select the better system. The (Click to select) is determined to be the better system. (Click to select) pull system push system5- Year SV O&M 15,000 1000 12,000 1500 9,000 The table above lists salve value (SV) and operating and maintenance (O&M) cost of an asset through 3 years with the initial cost of $20,000. Given MARR is 10%, which of the statements 3 2000 is correct (choose the closest answer)? a) The marginal cost at year 2 is $6,000 and the annual cost (EUAC) through year two is $6,500 b) The marginal cost at year 2 is $6,000 and the annual cost (EUAC) through year two is $7,048 c) The marginal cost at year 2 is $6,500 and the annual cost (EUAC) through year two is $7,048 d) The marginal cost at year 2 is $6,500 and the annual cost (EUAC) through year two is $6,0003. Make an economic analysis to determine which of the following two machines capable of performing the same task in a given amount of time, should be purchased. The minimum return is 8%. Machine A Machine B First Cost P10,000 6 years P20,000 14 years Estimated Life Salvage Value Annual maintenance P6,000 P300 P250 Basing on annual cost, using straight line method of computing depreciation, determine which machine you would choose and how much is the difference in its annual cost? Hint: Compute the Annual Cost of Machine A and Machine B then compare the costs, get the difference and recommend.
- 4. The DICT has just installed new software for their project management. The director wants to know the total equivalent cost of all future costs incurred to purchase the software system. If the new system will be used for the indefinite future, find the ca pitalized cost. The system has an installed cost of $150,000 and has an additional cost of $50,000 after 10 years. The annual software maintenance contract cost is $5000 for the first 4 years and $8000 the reafter. In addition, there is expected to be a recurring major upgrade cost of $15,000 every 13 years. Assume that i=5% per year for their funds.company is planned to install new automated plastic molding press. Four different presses are available as follows: Press 1 Press 2 Press 3 Press 4 Capital Investment $24,000 $30,000 $49,000 $52,000 Useful Life (year) 5 5 5 5 Annual Expenses Power ($) Labor ($) Maintenance ($) Tax & Insurance ($) 2,720 26,400 1,600 480 2,720 24,000 1,800 608 4,800 16,800 2,600 992 4,800 14,800 2,000 1,040 Assume that each press has the same output capacity (120,000 units per year) and all units can be sold (the selling price is $0.375 per unit. Additional capital invested is expected to earn at least 10%. a) Sketch Cash Flow Diagram for the four choices b) Which press should be chosen (use Present Worth PW method?Consider a five-year MACRS asset, which can be purchased at $80.000. Thesalvage value of this asset is expected to be $42,000 at the end of three years.What is the amount of gain (or loss) when the asset is disposed of at the end of three years?(a) Gain $11,280(b) Gain $9,860(c) Loss $9,860(d) Gain $18,960