The initial cost of a new m/c is $10,000. The annual operating cost is $1,000/yr for first 3 years, and then becomes $3,000/yr after that. The m/c needs a major repair at the end of 5th year, which costs $5,000. The m/c has 10 years useful life with salvage value of $4,000. Calculate EUAC for keeping the m/c for 10 years. (i=10%/yr)

The initial cost of a new m/c is $10,000. The annual operating cost is $1,000/yr for first 3 years, and then becomes $3,000/yr after that. The m/c needs a major repair at the end of 5th year, which costs $5,000. The m/c has 10 years useful life with salvage value of $4,000. Calculate EUAC for keeping the m/c for 10 years. (i=10%/yr)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A project that cost $72000 has a useful life of 5 years and a salvage value of $3000. The internal rate of return is 12% and the annual rate of return is 18%. The annual net income is
in a replacement analysis, the following is known about the challenger: the initial investment is $8000, there is no annual maintenance for the first three years, maintenance each year in years four and five is $2000, then $4500 in year six, and invreasinh by $2500 each year thereafter. the salvage value is $0 at all times and the MARR is 12% per year. the economic life of the challeneger is how many years?
1.A project has a first cost of $16,999with a life of 10 years and a salvage value of $2,500. If the MARR is12% and provides benefits of about$2,750 annually, what is the PW other project
A construction company is evaluating two options for an elevator, each of which has a useful life in 10 years. Option 1 costs $45, 000 to install and $2700 annually, with a salvage value of $ 3000 in year 10. Option 1 also requires a significant overhaul in year 6 with a cost of $8, 000. Option 2 costs $54, 000, costs $2, 800 annually, and has a salvage value of $5000 in year 10. Annual interest is 4%, compounded monthly. Which option would you choose? Show your work.
A project has an initial investment of $45,000. This project needs an annual spending of $6,000 to generate an annual revenue of $18,000 for six years. Moreover, the project is expected to return $12,000 as a salvage value at the EOY 6. Calculate the AW using MARR of 10%
QBS company wishes to replace its current equipment that was purchased 8years ago with the newer technology. System A will have a first cost of P1.6M, an operating cost of P70,000 per year, and a salvage value of P400,000 after its 4-year life. System B wll have a first cost of P2.1M, an operating cost of P50,000 the first year with an expected increase of P3,000 per year thereafter, and no salvage value after its 8-year life. On the basis of a future worth analysis at an interest rate of 12% per year, write the ANSWER for ALTERNATIVE A: Blank 1 ANSWER for ALTERNATIVE B: Blank 2
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A piece of equipment has an initial cost of $125,000. The annual 0&M costs are $31,000 and increase $1000 per year. The annual revenue is $45,000 and increase $1,500 per year. The equipment has a life span of 8 years and a salvage value of $30,000. Based on a MARR of 5%, determine the following: a. If the project is viable based on Net Present Worth. b. Determine the amount the annual revenue has to be increased to make the project viable. c. Determine the amount the salvage value has to increase to make the project viable.
The following cost and benefit information has been estimated for a pump that has a 10-year useful life. Purchase Cost = $2,400 Annual Operating Cost = $1,200 Annual Maintenance Cost = $300 Annual Benefits = $2,000 Salvage Value = $200 Using the interest rate of 9%, find the capital recovery cost for this pump.
A new project will cost $40,000 to fund today, and an additional $40,000 next year. The device built will generate revenues of $17,000 starting in year 2 which increases by 4% each year until the device is sold at the end of year 12. The device’s salvage value is $10,000. $2,000 of maintenance is required every year. What is the NPV of building this device, if the interest to borrow the funds is 15%? (Round to nearest dollar)
A company with a MARR of 10% must install one of two production machines. The economic parameters of each machine are as follows: Machine Initial cost (5) Service life (years) Salvage value end of life (S) $15,000 4 years $22,000 6 years 52,000 $1,000 The Future worth (FW) for the machine Y over the 12 years analysis period is:

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