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ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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![A manufacturer with a MARR of 20% is considering the installation of one of three packaging
machines. The economic parameters of each machine are as follows:
Packaging machine:
Initial cost ($)
Uniform annual benefit ($)
Uniform annual O&M cost ($)
X
Y
20,000
40,000
120,000 180,000
70,000
50,000
6
Service life (years)
3
Salvage value end of life ($) 2,000 4,000
Z
15,000
100,000
70,000
12
2,000
Which choice below gives the correct PW equation for machine X over the appropriate analysis
period?
O PW (costs) = $20k + $20k (P/F,20%,6) + $70k (P/A,20%, 12) - $2k (P/F,20%,6) - $2k (P/F,20%,12)
NPW = [ $120k (P/A,20%, 12) ] - [ $20k + $20k
(P/F,20%,6) + $70k (P/A, 20%, 12) - $2k (P/F,20%,6) - $2k (P/F,20 %,12)]
PW (benefits) = $120k (P/A,20%, 12)
O NPW = ($120k-$70k) (P/A,20%,12)](https://content.bartleby.com/qna-images/question/b9bfdcce-9d16-48cc-b9be-c4f7281bfaa8/fe743a25-15e1-455d-ad63-efe95c8b9681/44a2235_thumbnail.png)
Transcribed Image Text:A manufacturer with a MARR of 20% is considering the installation of one of three packaging
machines. The economic parameters of each machine are as follows:
Packaging machine:
Initial cost ($)
Uniform annual benefit ($)
Uniform annual O&M cost ($)
X
Y
20,000
40,000
120,000 180,000
70,000
50,000
6
Service life (years)
3
Salvage value end of life ($) 2,000 4,000
Z
15,000
100,000
70,000
12
2,000
Which choice below gives the correct PW equation for machine X over the appropriate analysis
period?
O PW (costs) = $20k + $20k (P/F,20%,6) + $70k (P/A,20%, 12) - $2k (P/F,20%,6) - $2k (P/F,20%,12)
NPW = [ $120k (P/A,20%, 12) ] - [ $20k + $20k
(P/F,20%,6) + $70k (P/A, 20%, 12) - $2k (P/F,20%,6) - $2k (P/F,20 %,12)]
PW (benefits) = $120k (P/A,20%, 12)
O NPW = ($120k-$70k) (P/A,20%,12)
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