ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Concurris Prototyping is committed to using the newest and finest equipment in its labs. Accordingly, Wilma, a senior engineer, has recommended that a 2-year-old piece of precision measurement equipment be replaced immediately. She believes it can be demonstrated that the proposed equipment is economically advantageous at a 15%-per year return and a planning horizon of 5 years. Perform the replacement analysis using the annual worth method, a 5-year study period, and the estimates below. Was Wilma correct? Equipment Original purchase price, $ Current market value, $ Remaining life, years Estimated value in 5 years, $ Salvage value after 15 years, $ AOC, $ per year Current -30,000 15,000 5 7,000 -11,000 The AW of the defender is $- challenger is $- Wilma ((Click to select)) correct. Proposed -40,000 -- 15 10,000 5,000 -3,000 and the AW of thearrow_forwardAnswer it ASAP with step by step solutionarrow_forwardStreet cost 25 M now and 2 M annual maintenance. At i=10%, what is the capitalized cost?arrow_forward
- Concurris Prototyping is committed to using the newest and finest equipment in its labs. Accordingly, Wilma, a senior engineer, has recommended that a 2-year-old piece of precision measurement equipment be replaced immediately. She believes it can be demonstrated that the proposed equipment is economically advantageous at a 15%-per year return and a planning horizon of 5 years. Perform the replacement analysis using the annual worth method, a 5-year study period, and the estimates below. Was Wilma correct Equipment Current Proposed Original purchase price, $ Current market value, $ -30,000 -42,000 15,000 Remaining life, years 5 15 Estimated value in 5 years, $ 7,000 10,000 5,000 -3,000 Salvage value after 15 years, $ AOC, $ per year The AW of the defender is $- Wilma (Click to select) correct. -14,000 and the AW of the challenger is $-arrow_forwardThe following five alternatives that are evaluated by the rate of return method, If the alternatives are independent and the MARR is 15% per year, the onels) to select is (are) Incremental ROR, N. When Compared with Alternative Initial Investment,S Alternative Alternative A BC DE 10.6 27.3 194 353 25.0 -25,000 -35,000 13.1 38.5 24.4 -40,000 13.4 46.5 27.3 26.8 -60,000 25.4 -75,000 20.2 Only D O Only D and E O Only A D, and E O Only Earrow_forwardThe prospective exploration for oil in the outer continental shelf by a small, independent drilling company has produced a rather curious pattern of cash flows as follows: EOY Net Cash Flow -$520,000 1-10 $200,000 10 -$1,500,000 The $1,500,000 expenses at EOY 10 will be incurred by the company in dismantling the drilling rig. Customarily, the company expects to earn at least 20% per year on invested capital before taxes. Complete the compounding factors below to determine the ERR. (-520000-1500000( ,20%, 10) ,i%, 10) = 200000(F/ ,20%,10)) (arrow_forward
- Avian Air Cargo is considering an investment of $10,000,000 with life expectancy of 10 years and annual operating cost of $400,000 in Year 1 with an $50,000 per year starting in Year 2 through the life of the project. Avian Air Cargo anticipates a revenue stream of $2,500,000 per year for 20 years I 12%, what is the rate of return for this project and is it economically justified? It is NOT economically justified because the rate of return is between 14% and 15%. It IS economically justified because the rate of return is between 10% and 11%. It is NOT economically justified because the rate of return is between 10% and 11%. It IS economically justified because the rate of return is between 14% and 15% of MARRarrow_forwardThree mutually exclusive electric-vehicle battery systems are being investigated by a large automobile manufacturer. Pertinent data are given below: Solve, a. Use the PW method to select the best battery system. The MARR is 15% per year, and the system chosen must provide service for 10 years. Assume repeatability. b. Confirm your recommendation in Part (a) using the IRR method.arrow_forwardSelect the best option using Rate of Return Analysis (incremental Rate of Return) \table[[MARR, 20%,,,], [Useful Life, 5 years,,,], [Brand, D1, D2, D3, D4]] \table[[\table[[Capital], [Investment]], $100,00, $140, 600, $148, 200, $122,000. Solve using excel spreadsheet. ف c 3. Select the best option using Rate of Return Analysis (incremental Rate of Return) MARR Useful Life Brand 20% 5 years D1 D2 D3 D4 Capital $100,00. $140,600 $148,200 $122,000 Investment Annual Expenses $29,000 $16,900 $14,800 $22,100 Salvage $10,000 $14,000 $25,600 $14,000arrow_forward
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