Problem 14.056 The two machines shown are being considered for a chip manufacturing operation. Assume the MARR is a real return of 11% per year and that the inflation rate is 6.7% per year. Machine First Cost, $ M&O, $ per year Salvage Value, $ Life, years A -149,000 B -780,000 -70,000 -5,000 40,000 200,000 5 00 Problem 14.056.a: Compare two alternatives based on their AW values without inflation consideration Which machine should be selected on the basis of an annual worth analysis if the estimates are in constant-value dollars? What is the annual worth of the selected alternative? Select machine B The annual worth of the alternative is $ -113800 Problem 14.056.b: Compare two alternatives based on their AW values with inflation consideration Which machine should be selected on the basis of an annual worth analysis if the estimates are in future dollars? What is the annual worth of the selected alternative? Select machine A The annual worth of the alternative is $ -21400

The index number representing the price level changes from 110 to 115 in one year and then from 115 to 120 the next year. Since the index number increases by five each year, is five inflation rate each year? Is the inflation rate the same each year? Explain your answer.

What is deflation?

Metropolitan Hospital has estimated its average monthly bed needs as N=1,000+9X where X=timeperiod(months);January2002=0 N=monthlybedneeds Assume that no new hospital additions are expected in the area in the foreseeable future. The following monthly seasonal adjustment factors have been estimated, using data from the past five years: Forecast Metropolitans bed demand for January, April, July, November, and December 2007. If the following actual and forecast values for June bed demands have been recorded, what seasonal adjustment factor would you recommend be used in making future June forecasts?

The total price of purchasing a basket of goods in the United Kingdom over four years is: year 1=940, year 2=970, year 3=1000, and year 4=1070. Calculate two price indices, one using year 1 as the base year (set equal to 100) and the other using year 4 as the base year (set equal to 100). Then, calculate the inflation rate based on the first price index. If you had used the other price index, would you get a different inflation rate? If you are unsure, do the calculation and find out.

What life cycle cost concept begins raising concerns by year 5 with any electric vehicle (EV)? If that issue affected resale value at year 5, would that affect perceived value-in-use? How exactly?

Why do you mink the U.S. experience with inflation over the last 50 years has been so much milder than in many other countries?

Inflation rates, like most statistics, are imperfect measures. Can you identify some ways that the inflation rate for fruit does not perfectly capture the rising price of fruit?

Go to this website (http://www.measuringworth.com/ppowerus/) for the Purchasing Power Calculator at measuringWorth.com. How much money would it take today to purchase what one dollar would have bought in the year of your birth?

According to Table 19.7, how often have recessions occurred since the end of World War II (1945)?