Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 35P
To determine
Calculate the capitalized value.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
An investment of $10,000 can be made that will produce uniform annual revenue of $5,310 for five years and then have
a market (recovery) value of $2,000 at the end of year (EOY) five. Annual expenses will be $3,000 at the end of each
year for operating and maintaining the project. Draw a cash-flow diagram for the five-year life of the project. Use the
corporation's viewpoint.
A group of concerned citizens has establisheda trust fund that pays 7.5% interest, compoundedmonthly, to preserve a historical building by providing annual maintenance funds of $140,000 forever.Compute the capitalized equivalent amount for thesebuilding maintenance expenses.
Steve Company is considering replacing one of its machines. The available new model has a cost of $220,000, a 16-year life, and an AOC of $2,000. The machine must also be serviced every 4 years at a cost of $10,000. The machine can be salvaged at $45, 000. The MARR is 12%
How much annual net income must be realized from the machine to recover the capital investment?
Chapter 5 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - If a project costs 100,000 and is expected to...Ch. 5 - Refer to Problem 5.2, and answer the following...Ch. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Consider the cash flows from an investment...Ch. 5 - Prob. 10P
Ch. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Consider the project balances in Table P5.19 for a...Ch. 5 - Your RD group has developed and tested a computer...Ch. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Geo-Star Manufacturing Company is considering a...Ch. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 37PCh. 5 - Prob. 38PCh. 5 - Prob. 39PCh. 5 - Prob. 40PCh. 5 - Prob. 41PCh. 5 - Prob. 42PCh. 5 - Two methods of carrying away surface runoff water...Ch. 5 - Prob. 44PCh. 5 - Prob. 45PCh. 5 - Prob. 46PCh. 5 - Prob. 47PCh. 5 - Prob. 48PCh. 5 - Prob. 49PCh. 5 - Prob. 50PCh. 5 - Prob. 51PCh. 5 - Prob. 52PCh. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - Prob. 55PCh. 5 - Prob. 56PCh. 5 - Prob. 57PCh. 5 - Prob. 58PCh. 5 - Prob. 59PCh. 5 - Prob. 1STCh. 5 - Prob. 2ST
Knowledge Booster
Similar questions
- a) Calculate the discounted payback period for the project. b) Calculate the Net Present Value of the project. c) Mr. Mokhodu, the recently hired manager for this potential project is not convinced that using the IRR is sufficient to assess the project’s viability. Calculate the Modified Internal Rate of Return (MIRR) that should be used.arrow_forwardCalculate the capitalized cost of an equipment maintained at a rate of 6% every year for P10,000, replaced every 3years for P25,000 at the same rate, and bought for P110,500. Please solve using economics formula.arrow_forwardPLEASE ANSWER AND SHOW SOLUTION Machine cost = $15,000; Life = 8 years; salvage value = $3000. What minimum cash return would the investor demand annually from the operation of this machine if he desires interest annually at the rate of 8% in his investment and accumulates a capital replacement fund by investing annual deposits at 5%?arrow_forward
- A $ 120,000 investment yields an annual return of $ 9,656.06 the first year; thereafter, annual returns increase at an annual rate of 5%. Based on a MARR of 6%, what is the discounted payback period for the investment?arrow_forwardUnequal Lives The Perez Company has the opportunity to invest in one of two mutually exclusive machines that will produce a product it will need for the foreseeable future. Machine A costs $9 million but realizes after-tax inflows of $3.5 million per year for 4 years. After 4 years, the machine must be replaced. Machine B costs $14 million and realizes after-tax inflows of $3 million per year for 8 years, after which it must be replaced. Assume that machine prices are not expected to rise because inflation will be offset by cheaper components used in the machines. The cost of capital is 8%. Using the replacement chain approach to project analysis, by how much would the value of the company increase if it accepted the better machine? Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places. million What is the equivalent annual annuity for each machine?…arrow_forwardHow do you calculate the PVIFA for the equation: EAC = NPV / Annutiy factor How would you use the financial calculator to solve for EAC and PVIFA? You are evaluating two different silicon wafer milling machines. The Techron I costs $270,000, has a three-year life, and has pre-tax operating costs of $69,000 per year. The Techron II costs $475,000, has a five-year life, and has pre-tax operating costs of $36,000 per year. Both milling machines are in Class 8 (CCA rate of 20 percent per year). Assume a salvage value of $45,000. If your tax rate is 35 percent and your discount rate is 10 percent, compute the EAC for both machines. Which do you prefer? Why?arrow_forward
- Southeastern Pennsylvania Transportation Authority (SEPTA) has just opened a new route connecting major tourist sites around Philadelphia. The Independence Line has the following data • A capital investment of $63 million, • An expected operating and maintenance expenses of $11 milfon per year • The final salvage value at the end of a 30-year life is negligible • Revenue generated by each customer is $11. • Assume there are 365 days in a year • The MARR is 6% compounded annualy What is the total annual cost of this route? How many riders per day are needed for this route to break even?arrow_forwardRaytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for $1.4 million and will have a salvage value of $200,000 after 8 years. Its use will create an opportunity to increase sales by $650,000 per year and will have operating expenses of $250,000 per year. Corporate income taxes are 40 percent. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, for 8 years. After-tax MARR is 10 percent. Use 7- years class depreciation for MACRS and IRR if the chamber is keptarrow_forwardAt 5.4% a bridge cost P 290 M with a life of 19 years. The bridge must be partially rebuilt at a cost of P 80 M at the end of each of the 19 years. Calculate the capitalized cost if an annual maintenance of P 520 000 is required.arrow_forward
- 5-S2 A new recycling sorting and processing line is proposed to serve a medium size city. The installed cost of the new line is $2,400,000. The residual value after ten years is estimated at $480,000. The unit would produce recycled material ready for resale at a rate of $0.15/pound, and would run for ten years. How much recyclable material must be generated every year to justify the project (i.e., for the present value of the project to be positive). Use an interest rate of 9%.arrow_forwardA city plans a pipeline to transport water from a distant watershed area to the city. The pipeline will cost $8 million and will have an expected life of 70 years. The city expects to keep the water line in service indefinitely. Compute the capitalized cost, assuming 7% interest.arrow_forwardA new municipal refuse-collection truck can be purchased for $84,000. Its expected useful life is six years, at which time its market value will be zero. Annual receipts less expenses will be approximately $18,000 per year over the six-year study period. At MARR of 19%, calculate the internal rate of return of the project a. 7% b. 8% c. 9% d. none of the abovearrow_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:PEARSON
Engineering 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 Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial 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