The XYZ manufacturing company is considering replacing one of its metal cutting machine which can be sold today for $3,000. If they kept this machine for 4 more years, its salvage value will be zero. The challenger costs $18,000, and its life is 4 years. The estimated salvage value of the challenger at the end of four years is $6,000. Should the XYZ company replace the old machine? Use the opportunity cost approach with rate of return of 10%. Assume operating costs per year for defender equals $2,000 and a saving in operating costs per year of 75% for challenger.
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- a ABC company purchased a machine use to their business whose first cost is P 500,000 with an estimated life of 10 years. The estimated salvage value of the equipment at the end of its lifetime is P 25,000. Determine the depreciation charge and book value at the end of various years using the straight line method of depreciation.1. Construct a risk analysis that examines the various forms of risk (technical, commercial, financial etc) related to the creation of this office building 2.Explain how the analysis would change if office space were in high demandPat James, the purchasing agent for a local plant of the Oakden Electronics Division, was considering the possible purchase of a component from a new supplier. The component’s purchase price, $0.90, compared favorably with the standard price of $1.10. Given the quantity that would be purchased, Pat knew that the favorable price variance would help to offset an unfavorable variance for another component. By offsetting the unfavorable variance, his overall performance report would be impressive and good enough to help him qualify for the annual bonus. More importantly, a good performance rating this year would help him to secure a position at division headquarters at a significant salary increase. Purchase of the part, however, presented Pat with a dilemma. Consistent with his past behavior, Pat made inquiries regarding the reliability of the new supplier and the part’s quality. Reports were basically negative. The supplier had a reputation for making the first two or three deliveries on…
- Pat James, the purchasing agent for a local plant of the Oakden Electronics Division, was considering the possible purchase of a component from a new supplier. The component’s purchase price, $0.90, compared favorably with the standard price of $1.10. Given the quantity that would be purchased, Pat knew that the favorable price variance would help to offset an unfavorable variance for another component. By offsetting the unfavorable variance, his overall performance report would be impressive and good enough to help him qualify for the annual bonus. More importantly, a good performance rating this year would help him to secure a position at division headquarters at a significant salary increase. Purchase of the part, however, presented Pat with a dilemma. Consistent with his past behavior, Pat made inquiries regarding the reliability of the new supplier and the part’s quality. Reports were basically negative. The supplier had a reputation for making the first two or three deliveries on…Pat James, the purchasing agent for a local plant of the Oakden Electronics Division, was considering the possible purchase of a component from a new supplier. The component’s purchase price, $0.90, compared favorably with the standard price of $1.10. Given the quantity that would be purchased, Pat knew that the favorable price variance would help to offset an unfavorable variance for another component. By offsetting the unfavorable variance, his overall performance report would be impressive and good enough to help him qualify for the annual bonus. More importantly, a good performance rating this year would help him to secure a position at division headquarters at a significant salary increase. Purchase of the part, however, presented Pat with a dilemma. Consistent with his past behavior, Pat made inquiries regarding the reliability of the new supplier and the part’s quality. Reports were basically negative. The supplier had a reputation for making the first two or three deliveries on…A manager is going to purchase new processing equipment and must decide on the number ofspare parts to order with the new equipment. The spares cost $200 each, and any unused spareswill have an expected salvage value of $50 each. The probability of usage can be described by thisdistribution:Number 0 1 2 3Probability .10 .50 .25 .15If a part fails and a spare is not available, two days will be needed to obtain a replacementand install it. The cost for idle equipment is $500 per day. What quantity of spares should beordered?a. Use the ratio method.b. Use the tabular method (see Table 13.3).
- An insured has a homeowners policy and requires her to be a member of the homeowners association in her neighborhood. The association's community house has burned down, and the insured has been assessed $1,200 for her share of the rebuilding cost. How much of the assessment will the homeowners policy pay? A O None BO $500 CO $1,000 DO $1,200Sun TV sells TV sets. It does not sell smart TVs so customers do not come to Sun TV if they want to purchase smart TVs. Sun TV wants to start selling smart TVs and will only sell smart TVs to customers to whom they advertise. Managers use customer information (income level, previous purchase history) to decide which customers they should target. The team needs to decide how sure it must be in predicting customer interest in a smart TV. If it is too cautious, it will choose a very high cutoff probability and only market to customers who it believes are very likely to be in the market for a smart TV. This may cause them to miss out on many customers. If they are too aggressive and choose a low cutoff probability, they may identify more individuals interested in buying smart TVs but also end up wasting marketing dollars on customers who are not interested in purchasing smart TVs. To choose a cutoff probability, the team develops the confusion matrices below for two cutoff probabilities on…Chatham Automotive purchased new electric forklifts to move steel automobile parts two years ago. They cost $65,000 each, including the charging stand. In practice, it was found that they did not hold a charge as long as claimed by the manufacturer, so operating costs are very high. As a result, their current salvage value is about $9,000. Chatham is considering replacing them with propane models. New propane forklifts cost $58,000 each. After one year, they have a salvage value of $40,000, and thereafter decline in value at a declining-balance depreciation rate of 20 percent, as does the electric model from this time on. The MARR is 8 percent. Operating costs for the electric model will be $19,000 this year, rising by 12 percent per year. Operating costs for the propane model will initially be $11,000 over the first year, rising by 12 percent per year. Should Chatham Automotive replace the forklifts now? Find EAC for both propane and elctric forklifts. P.S. Show…
- A factory has a frequency of breakdown of their machine per month as shown in table below and the cost of breakdown remains the same but the cost of preventive maintenance becomes ksh 1250 per month, and given that if preventive maintenance is performed, probability of a machine breakdown is negligible. Determine whether the engineer should use preventive maintenance or would it be cheaper to repair the machine when it breakdown. Frequency of breakdown of machine per month Number of breakdown 0 1 2 3 Frequency 20 30 40 10A rural cooperative purchased a trencher at a cost of P230,500.00. It is estimated that the trencher will have a salvage value of P25,000.00 after digging 300,000 meters of irrigation canals. Determine the book value of the trencher after two years, if it was used to dig 50,000 meters on the first year and 75,000 meters on the second year. (Ans. P144,875.00)Alternative Alternative 1 Alternative 2 Alternative 3 State of Nature Outcome 1 ($) 800 500 700 0.62 Probability according to the payoff table? OEMV (Alternative 1) = $900 EMV (Alternative 3) is the highest EMV EMV (Alternative 2) = EMV (Alternative 3) EMV (Alternative 1) is the highest EMV Outcome 2 ($) 1000 1200 900 0.38 Which of the following statements is correct