A pump has failed in a facility that will be completely replaced in three years. A brass pump costing $6,000 installed will last three years. However, a used stainless-steel pump that should last three more years has been sitting in the maintenance shop for a year. The pump cost $13,000 when it was new. The accountants say the pump is now worth $7,000. The maintenance supervisor says that it will cost an extra $500 to reconfigure the pump for the new use, or that he could sell it used (as is) for $4,000. (a) What is the net benefit or net cost of installing the stainless-steel pump? Of installing the brass pump? (b) Which option is better? (c) What is the opportunity cost for this set of options?

A pump has failed in a facility that will be completely replaced in three years. A brass pump costing $6,000 installed will last three years. However, a used stainless-steel pump that should last three more years has been sitting in the maintenance shop for a year. The pump cost $13,000 when it was new. The accountants say the pump is now worth $7,000. The maintenance supervisor says that it will cost an extra $500 to reconfigure the pump for the new use, or that he could sell it used (as is) for $4,000. (a) What is the net benefit or net cost of installing the stainless-steel pump? Of installing the brass pump? (b) Which option is better? (c) What is the opportunity cost for this set of options?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

D.1.
a company has forecasted the following staffing requirements for full time employees for the next six periods. Period 1 2 3 4 5 6 Requirement 5 8 8 6 9 22 The company currently has 10 employees. Training facility limits hiring to 10 employees per period at max. Regular time wages are $2770 per period. Under-time is not allowed. Over time wages are 150% of regular time wages. The hiring cost is $1,800 per person and the layoff cost is $800 per person. The total associated regular time costs for a chase plan plan is:
If the R2=0.5647 and the SSR=357414. What is the SST? Write your answer to 2 decimal places.
one factory manager bought a rare machine for $10 million. It is estimated that the sales value of the machine at the end of the first year will be $3 million and the machine will be worth $500,000 due to the demand by the antique dealers. The maintenance cost is expected to be $300,000 in the first 3 years and double each year thereafter. In this way, the maintenance cost of the 4th year is $600,000, the maintenance cost of the 5th year is $1,200,000, etc. Calculate the economic life of this machine based on a 15% MCVO. A) 7 B) 3 C)12 D) 6 E) 9
SamReap Bhd, a listed company, manufactures eco-friendly fridges for industrial and domestic refrigeration. The company started producing and selling its own brand of fridges a few years ago. To minimize the energy consumption, a fridge requires specialised electronic parts to be fitted within the motor. The required electronic parts are not available locally. The company imports the electronic parts from the US for the production of its fridges. SamReap Bhd has contracted to purchase 8,000 electronic parts at a unit price of $20. The US supplier has granted four months credit before payment is due. SamReap Bhd currently has no surplus cash, but can borrow for short term at 3% above bank base rate or invest for short term at 1% below bank base rate in either Malaysia or US. Current exchange rates RM/US$ Spot 3.2677 – 3.2682 I month forward 2.5 – 1.5 premium 4 months forward 4 - 4.5 discount The premium/discount relates to the Ringgit Malaysia Current bank base rate |MALAYSIA 6.60% US…
Please correct Solution with Explanation and do not give image format
None
The following information is available for Product 7TY which EOQ is of 125 kg. The maximum usage level is 250 kg per day while the minimum usage level is 250kg per day. Lead time is between 3-7 days. Calculate the maximum inventory level for Product 7TY,
A company plans to design and build transport vehicles for the Army. The cost for the design is $10M. The cost for the test prototype is $2M. The cost to produce and test each production vehicle is $0.5M. What is the non-recurring cost? What is the recurring cost per vehicle? What price per vehicle must the company sell the vehicles to the government to make $50K profit per vehicle if the company sold 50 vehicles? 100 vehicles? Why does the price per vehicle go down when production goes up?
Suppose that two certain cars have the following average operating and ownership costs. Average Costs per Mile Ownership Operating $0.24 $0.20 $0.68 $0.25 If you drive 20,000 miles per year, by how much does the total annual expense for Car A exceed that of Car B over nine years? Car A Car B The total annual expense for Car A exceeds that of Car B by $ (Round to the nearest dollar as needed.) over nine years. Total $0.92 $0.45
Mirtha owns an online jewelry store that specializes in earrings. In March, she sells 50 pairs of earrings priced at $15. The cost of materials to create the 50 pairs of earrings was $100. The website she uses to sell her wares costs her $10 a month, and she is also charged 4% on each sale by the company that processes debit/credit card purchases. Which of the following best represents Mirth’s total cost? Group of answer choices A)The $750 Mirtha earned from earring sales minus the materials ($100), online website charge ($10), and payment processing charge (4%) B)The sum of the materials ($100), website charge ($10), and 4% payment processing charge (4%) C)The cost of all the materials used to create the earrings, $100 D)The costs of materials minus the costs it takes to run her business through the online store, in this case the $10 website charges and the 4% payment processing charge
Ab6