Initial Investment: $50,000 Annual Revenues: $20,000 Annual Operating Costs: $2,500 Salvage Value @ EOY 5: $10,000 Study Period: 5 years MARR: 20%
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If we think the investment is sensitive to annual revenues, what is its breakeven point for the project?
MARR stands for "Minimum Acceptable Rate of Return". It is the minimum rate of return or discount rate that an investor or company requires from an investment to compensate for the risk and opportunity cost of the investment.
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- 5- Year SV O&M 15,000 1000 12,000 1500 9,000 The table above lists salve value (SV) and operating and maintenance (O&M) cost of an asset through 3 years with the initial cost of $20,000. Given MARR is 10%, which of the statements 3 2000 is correct (choose the closest answer)? a) The marginal cost at year 2 is $6,000 and the annual cost (EUAC) through year two is $6,500 b) The marginal cost at year 2 is $6,000 and the annual cost (EUAC) through year two is $7,048 c) The marginal cost at year 2 is $6,500 and the annual cost (EUAC) through year two is $7,048 d) The marginal cost at year 2 is $6,500 and the annual cost (EUAC) through year two is $6,000Initial Cost: ($300,000)The Study Period: 15 yearsSalvage (Market) Value of the Project: 12% of the initial costOperating Costs in the first year: ($7,500)Operating Costs increase by 5% per yearBenefits in the first year: $30,000 Benefit increase by 13% per yearMARR: 9% per year 1)Determine the NPW, AW, FW of the project. 2) Is the Project acceptable? WHY?2-17 Consider the accompanying breakeven graph for an investment, and answer the following questions. $40 $35 $30 Total Revenue $25 $20- Total Cost $15 $10 -- $5 $0 0. 250 500 750 1000 1250 1500 1750 Output (units/year) (a) Give the equation for total revenue for x units per year. (b) Give the equation for total costs for x units per year. (c) What is the "breakeven" level of x? :11 ou hove a Dollars (X104)
- SUBJECT: ENGINEERING ECONOMICS (a) Identify the Given and the Unknown or what is being asked in the problem (b)Provide the formula to be used (c)Show the complete solution. The final answer is already provided.. At 5% annual interest, what is the difference in the present and future value of P100 paid at the endof each year for 10 years and P100 paid at the beginning of each year? Answer: P value difference = P38.61 F value difference = P62.892-A company has requested price offers from two companies for the equipment they will purchase. Estimated cash flows based on the price offers of both companies are as follows. MCFO = %10 А В Initial investment cost,$ -1500000 -2250000 Annual operating cost, $ -700000 -600000 Scrap value, $ Service Life, $ 100000 50000 8 8 a)Using Annual Value Analysis, find out which option will be more economical. b) Solve with esent value analysis.A start up business is considering two types of equipment - data are as follows: TYPE A TYPE B First Cost Annual operating cost Annual labor cost P200,000.00 32,000.00 50,000.00 P300,000.00 24,000.00 32,000.00 Insurance and property taxes 3% Payroll taxes 4% Estimated life 10 The minimum required rate of return is 15%. 3% 4% 10 Using present worth cost method, determine the value of alternative A and alternative B:
- 4. Calculate the present worth of a machine which costs $80000 initially and will have a $18000 salvage value after 11 years. The operating cost is $10000 at the end of yearl and amounts increasing by $800 each year. Use an interest rate of 9% per year.2. Machines that have the following costs are under consideration for a robotized welding process. Using an interest rate of 10% per year, determine which alternative should be selected on the basis of a present worth analysis. Machine X Machine Y First Cost, $ -250,000 -430,000 Annual operating cost, $ -60,000 per year Salvage value, $ -40,000 70,000 95,000 Life, years 8.Required information The Briggs and Stratton Commercial Division designs and manufacturers small engines for golf turf maintenance equipment. A robotics-based testing system with support equipment will ensure that their new signature guarantee program entitled "Always Insta-Start" does indeed work for every engine produced. First cost of equipment AOC per Year Salvage Value Estimated Life Pull System $-1,550,000 $-620,000 $90,000 8 years Saved Push System $-2,650,000 $-620,000 $50,000 8 years Determine the salvage value for the push system that will make the company indifferent to the two systems. Also, MARR = 11% per year. The salvage value for the push system is determined to be $ in $1000 units.
- Correct only pls. Only the highlighted parts. Npv if pretax cost savings are $100000 per year is -121277. 58. Now how to find the last part.A company makes bicycles. It buys the tires for bicycles from a supplier. 2 tires are used in one bicycle. According to the information below calculate the Economic Order Quantity for tires. Bicycle production per month: 450 units / month Cost of Tire: $25 / piece Annual Inventory Carrying Cost: 13% Ordering Cost: $50 / orderThe following table shows the past profits of Company X that has just come for sale to the public this month: Year Profit (in thousands $) 2018 140 2017 130 2016 110 2015 120 2014 100 9. If the investment is held at perpetuity, the PV is: a) 1,000 b) 500 c) 800 d) 700