Part a.) An engineer with Calahan Technologies calculated the AW of cost values shown for a presently owned machine using estimates she obtained from the vendor and company records. A challenger has an economic service life of 7 years with an AW of $-86,000 per year. Assume that all future costs remain as estimated and the challenger's technology will definitely replace that of the defender within 5 years. When should the company purchase the challenger? Retention Period, Years AW of Costs, $ per Year 1 -92,000 -81,000 -87,000 4 -89,000 -95,000 Part b.) The costs and revenue projections for a new product made on the machine from Part a.) are estimated below. What is the estimated profit at a production rate of 25% above breakeven? Fixed cost = $592,000 per year Production cost per unit = $198 Revenue per unit = $330

Part a.) An engineer with Calahan Technologies calculated the AW of cost values shown for a presently owned machine using estimates she obtained from the vendor and company records. A challenger has an economic service life of 7 years with an AW of $-86,000 per year. Assume that all future costs remain as estimated and the challenger's technology will definitely replace that of the defender within 5 years. When should the company purchase the challenger? Retention Period, Years AW of Costs, $ per Year 1 -92,000 -81,000 -87,000 4 -89,000 -95,000 Part b.) The costs and revenue projections for a new product made on the machine from Part a.) are estimated below. What is the estimated profit at a production rate of 25% above breakeven? Fixed cost = $592,000 per year Production cost per unit = $198 Revenue per unit = $330

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

A portable concrete test instrument used in construction for evaluating and profiling concrete surfaces (MACRS-GDS 5-year property class) is under consideration by a construction firm for $18,000. The instrument will be used for 6 years and be worth $3,000 at that time. The annual cost of use and maintenance will be $13,500. Alternatively, a more automated instrument (same property class) available from the manufacturer costs $27.000,with use and maintenance costs of only $8.500 and salvage value after 6 years of $1,500. The marginal tax rate is 25%, and MARR is an after-tax 12%. Determine which alternative is less costly, based upon comparison of after-tax annual worth. Show the AW values used to make your decision: Alternative 1: $ Alternative 2: S Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±10.
A machine that cost $120,000 3 years ago can be sold now for $51,500. Its market value is expected to be $40,000 and $20,000 1 year and 2 years from now, respectively. Its operating cost was $18,000 for the first 3 years of its life, but the M&O cost is expected to be $23,000 for the next 2 years. A new improved machine that can be purchased for $135,500 will have an economic life of 5 years, and an operating cost of $9,000 per year, and a salvage value of $32,000 whenever it is replaced. At an interest rate of 10% per year, determine if the presently owned machine should be replaced now, 1 year from now, or 2 years from now. The annual worth of the existing machine one year from now is $- 50500 O. the annual worth of the existing machine two years from now is $- 30,500 . and the annual worth of the new machine is $-112,500 The presently owned machine should be replaced now 13
For equipment that has a first cost of RM 10,000 and the estimated operating costs and year-end salvage values shown in Table Q3 below, determine the economic service life ati= 10% per year. Table Q3 Year Operating Cost, RM per Year -1,000 -1,200 -1,300 -2,000 -3,000 Salvage Value, RM 7,000 5,000 4,500 3,000 2,000 3 4
A small strip-mining coal company is trying to decide whether it should purchase or lease a new clamshell. If purchased, the “shell” will cost $140,000 and is expected to have a $45,000 salvage value after 6 years. Alternatively, the company can lease a clamshell for only $14,000 per year, but the lease payment will have to be made at the beginning of each year. If the clamshell is purchased, it will be leased to other strip-mining companies whenever possible, an activity that is expected to yield revenues of $10,000 per year. If the company’s MARR is 12% per year, should the clamshell be purchased or leased on the basis of a future worth analysis? Assume the annual M&O cost is the same for both options. The future worth when purchased is $ . The future worth when leased is $ .
None
not use excel. Typed answer onlys Q)Calculate the capitalized cost of a machine-2 that has a first cost of $91065 and annual cost of $7938 per year Given that i=10% per year and the number of years is infinite.
provide certification & registrations needed to start sole trade truck business; for these services: towing/ carrying = R500, rental-hire = R1500, local moving (furniture/office/warhousing & courier, truck wash, packing/ unpacking) = R1650/day. Regional routes from: Cape town, Durban, johannesburg, blomfontein, port elizabeth. Include detailed business plan for company name (Zltdex transport)
XY Inc. finds that the total cost of producing and selling "D" number of ACU sets is 50OD2 +3000D -43750. Each product is sold for Php600. The break even points are Blank 1units and Blank 2 units. (round off to 2 decimal places
A machine purchased 3 years ago for $140,000 is now too slow to satisfy the demand of the customers. It can be upgraded now for $81,000 or sold to a smaller company Internationally for $42000. The upgraded machine will have an annual operating cost of $87,000 per year and a $32,000 salvage value in 3 years. If upgraded, the presently owned machine will be retalned for only 3 more years, then replaced with a machine to be used in the manufacture of several other product lines. The replacement machine, which will serve the company now and for a maximum of 8 years, costs $217,000. Its salvage value will be $52.000 for years 1 through 5: $20,000 after 6 years; and $10,000 thereafter. It will have an estimated operating cost of $45,000 per year. Perform an economic analysis at 14% per year using a specified 3-year planning horizon. a) Determine if the current machine should be replaced now or 3 years from now. b) Once decided, determine the equlvalent AW for the next three years. a) The…
XYZ Corporation manufactures book cases that it sells for P65 each. It costs XYZ P35000/year to operate its plant. This sum includes rent, depreciation charges on equipment and salary payments. If the cost to produce one book case is P50, how many case must be sold each year for XYZ to avoid taking loss? Select the correct response: 2334 2336 2335 2333
A manufacturer has been ordered to stop discharging acidic waste into the city sewer. Your analysis shows that the company should choose one of the following systems: System Installed Cost H J $25,000 Your Answer: $35,000 Annual O&M Cost $1,000 in the first year, but grows by 10% each year $500 in the first year, but grows each year by $100 Salvage Value $2,000 $5,000 If the life span of each project is 20 years and interest is assumed to be Y%, which system should be purchased? 4
5