Hand written solutions are strictly prohibited Apricot Computers is considering replacing its material handling system and either purchasing or leasing a new system. The oldsystem has an annual operating and maintenance cost of $30,000, a remaining life of 8 years, and an estimated salvage value of $4,300at that time.A new system can be purchased for $278,000; it will be worth $27,000 in 8 years; and it will have annual operating and maintenancecosts of $19,000/year. If the new system is purchased, the old system can be traded in for $21,000.Leasing a new system will cost $25,000/year, payable at the beginning of the year, plus operating costs of $8,700/year, payable at theend of the year. If the new system is leased, the old system will be sold for $10,000.MARR is 18%. Compare the annual worths of keeping the old system, buying a new system, and leasing a new system based upon aplanning horizon of 8 years.Click here to access the TVM Factor Table CalculatorFor calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answer to 2 decimal places, e.g. 52.75. Theabsolute cell tolerance is ±1Part aWhat is the EUAC of the best option using the cash flow approach?$

1. Keeping the old system: Annual Worth (Old) = Annual operating and maintenance cost + Salvage…

Answered: Apricot Computers is considering…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5. The physical life is always greater than all the other "life" factors under replacement analysis. 6. If breakeven analysis is conducted with PW analysis for different MEAS, it doesn't guarantee that the fastest alternative to reach its breakeven point has also the highest equivalent worth.
! Required information An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $41,000, an annual operating cost (AOC) of $13,000, and a service life of 2 years. Method B will cost $82,000 to buy and will have an AOC of $4,500 over its 4-year service life. Method C costs $117,000 initially with an AOC of $4,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 9% of its first cost. Perform a future worth analysis to select the method at i = 8% per year. The future worth of method A is $ 65,832.64 The future worth of method B is $ 98,183.44 The future worth of method C is $ 157,622.43 > Method с Return to question is selected.
! Required information An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $31,000, an annual operating cost (AOC) of $5,000, and a service life of 2 years. Method B will cost $71,000 to buy and will have an AOC of $3,500 over its 4-year service life. Method C costs $117,000 initially with an AOC of $3,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 7% of its first cost. Perform a present worth analysis to select the method at i = 9% per year. The present worth of method A is $ -114,678.6 The present worth of method B is $ -140,668.2 The present worth of method C is $ -132261.24 Method A is selected.
! Required information An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $40,000, an annual operating cost (AOC) of $12,000, and a service life of 2 years. Method B will cost $70,000 to buy and will have an AOC of $6,000 over its 4-year service life. Method C costs $125,000 initially with an AOC of $3,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 7% of its first cost. Perform a present worth analysis to select the method at /= 12% per year. The present worth of method A is $ The present worth of method B is $ The present worth of method C is $ ✓is selected. Method C
A factory manager bought a rare machine for $10 million. of the machine The sales value at the end of the first year will be $3 million and the machine will be sold by antique dealers. It is estimated to be valued at $500,000 due to the Initial cost of maintenance Expected to be $300,000 in 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. will be. Calculate the economic life of this machine based on the Minimum Attractive Efficiency Ratio of 15%.
5
Guardian is a national manufacturing company of home health care appliances. It is faced with amake-or-buy decision: a newly engineered lift can be installed in a car trunk to raise and lower awheelchair.Buy: The steel arm of the lift can be purchased for $0.60 per unit or make in house.Make: If manufactured on site, two machines will be required. Machine A is estimated to cost$18,000, have a life of 6 years, and a $2,000 salvage value. Machine B will cost $12,000, have a life of4 years, and a $-500 salvage value (carry-away cost). In addition, machine A will require anoverhaul after 3 years costing $3,000. The AOC for A is expected to be $6,000 per year and for B$5,000 per year. A total four operators will be required for the two machines at a rate of $12.50 perhour per operator. 1,000 units will be manufactured in a normal 8-hour period.Use MARR=15% to find the number of units to be manufacture each year
Mr. Garcia sold his machine for P20,000 after using it for 6 years. He bought a new machine worth 75,000 with an expected life of 12 years and a salvage value of 2,000. The operating cost is P5,500 per year. The old machine which he bought for P50,000 when new will be useful for 10 years and a junk value of 1,000 but because of appropriate maintenance, it will be useful for another 5 years, no salvage value, with an annual operating cost of twice the new one. If money is worth 12%, was the engineer justified in selling the old machine? Use the ROR method. Show complete solution. Thank you
Rr.5.
Solve it correctly please. I need correct answer. I
The AW values for retaining a presently owned machine for additional years are shown in the table. Note that the values represent the AW amount for each of the n years that the asset is kept, i.e., if it is kept 5 more years, the annual worth is $−95,000 for each of the 5 years. Assume that future costs remain as estimated for the replacement study and that used machines like the one presently owned will always be available. (a) What is the ESL and associated AW of the defender at a MARR of 12% per year? (b) A challenger with an ESL of 7 years and an AWC = $-90,000 per year has been identified. Which AW will be less for the respective ESL periods? Retention Period, Years AW Value, $ per Year 1 -89,000 2 -95,000 3 -86,000 4 -85,000 5 -95,000 a) The ESL of the defender is ____year(s) with the lowest AW of $_____. b) The (Click to select defender challenger) has the lower AW at $______for n equal to ____ .
Mr. Russ T. Steele sells his old vehicle for $5000 (you get more if you private salel) and pays cash for a used (but newer vehicle) that costs $10,000. He also understands that he needs to allow for maintenance and operation costs of his vehicle. He estimates that these costs will be approximately $2000 a year and estimates that the costs will increase by $100 per year. He hopes to keep the vehicle for five years and then sell it for an estimated value of $2000. Mr. Steele has an MARR of 8%. The present value of the cash flow associated with his purchase is most nearly: Oa. -$7,400 b.$-12,400 C $12,000 Od.-$15,100

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