Determine the economic useful life of a piece of equipment whose initial cost is $10,000 and its salvage value operating costs are shown below: use i=10% per year Year Costs of operation ($ per year) rescue value 1 1000 7000 2 1200 5000 3 1300 4500 4 2000 3000 5 3000 2000
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Determine the economic useful life of a piece of equipment whose initial cost is $10,000 and its salvage value operating costs are shown below: use i=10% per year
| Year | Costs of operation ($ per year) | rescue value |
| 1 | 1000 | 7000 |
| 2 | 1200 | 5000 |
| 3 | 1300 | 4500 |
| 4 | 2000 | 3000 |
| 5 | 3000 | 2000 |
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- From the given values below, which machine should be selected using (a) Present worth Method and (b) Future worth Method if interest rate is 10% per year? Machine A B Initial Cost (Php) Annual Operating Cost 146,000 15,000 80,000 10,000 3 220,000 10,000 75,000 25,000 Annual Revenue Salvage Value Useful Life (years) 6Compare the machines below using present worth analysis at i10% per year and find which one should be selected Machine Y First Cost Operating Cost Savage Lfe cycle Machine X 20.000 3.000 3.000 3years Firat Cost 30.000 .000 Annuel Operating Cost Salvage Life cycle 3.000 6 yoarsGiven the following data of equipment A and B. A First Cost P 50 000 P 150 000 2000 Salvage Value Annual Maintenance 6000 Economic life 6000 3000 5 15 The MARR is 12%. Use sinking fund depreciation. What is the rate of return for the additional initial investment on equipment B?
- From the given values below, which machine should be selected using (a) Present worth Method and (b) Future worth Method if interest rate is 10% per year? Machine Initial Cost (Php) Annual Operating Cost A В 146,000 15,000 220,000 10,000 75,000 25,000 Annual Revenue 80,000 10,000 Salvage Value Useful Life (years) 6What is the payback period for the project described below? Machine investment $24,999 MARR 10% Annual benefit $6,500 Annual maintenance $2,000 Life 10 years Salvage value $2,000Consider the following operating and maintenance costs of a new machine whose first cost is $ 86,000 with a useful life of 6 years and its salvage value is $ 14,000 whatever its age is. The interest rate is 6%, compounded annually. Find its economic life. Year 1 2 3 4 5 6 O&M Costs, $ 5,000 7,000 9,000 11,000 13,000 15,000
- Reference: Case Study S Dunn Manufacturing is considering the following two alternatives. The cost information for the two proposals for replacing an equipment are provided are in table below. Initial cost Benefits/year Machine X $120,000 $20,000 for the first 10 years and $9,000 for the next 10 years Life Salvage value $40,000 MARR 5.2. The NPW of machine X is A) $35,158 B) $48,192 C) $50,752 Machine Y $96,000 $12,000 per year for 20 years. 20 years 8% $20,000Determine the B/C ratio for the following project. First Cost P100, 000 Project life, years 5 Salvage value P10, 000 Annual benefits Р60, 000 Annual O and M Р22, 000 Interest rate, % 15A machine costs P150000 The book value at the end of 2 years is estimated to be P870000. If the salvage value the end of its useful life is P600000. What os the machine's economic life in years using the sum of years method.
- Part a) Use a 10% MARR to determine the economic service life (ESL) of a defender asset (and the corresponding annual worth (AW) value) with the following characteristics: First cost = $70,000 Estimated annual operating cost (AOC) = $20,000 per year Maximum remaining useful life = 4 years Salvage value = $10,000 anytime it is replaced Part b) Determine the ESL and corresponding AW of the asset using more precise estimates as follows: AOC will be $20,000 in the first year and then increase by 15% per year Maximum remaining useful life = 8 years Salvage value will be $10,000 at EOY 1 and then decrease by $1,000 per yearRLC Manufacturing is planning to purchase a cutting equipment. Information are as follows: Equipment 1 Equipment 2 First Cost P 12,000 P 18,000 Salvage Value P 600 P 2,000 Annual Operation P 3,200 P 2,500 Annual Maintenance P 1,200 P 1,000 Taxes & Insurance 3% 3% Life, years 10 15 Money is worth at least 16%. Which equipment should be selected? Use: a. Rate of Return Method Rate of Return Method Annual Cost Method NOTE: Show cashflow diagram.The following data pertain to an investment proposal: Cost of investment Annual cost savings Estimated salvage value Expected life of investment $45,000 $10,000 $0 5 years 10% Discount rate What is the present value of the proposed investment?