Two processes can be used for producing a polymer that reduces friction loss in engines. Process T will have a first cost of $600,000, an operating cost of $84,000 per year, and a salvage value of $80,000 after its 2-year life. Process W will have a first cost of $1,320,000, an operating cost of $25,000 per year, and a $120,000 salvage value after its 4-year life. Process W will also require updating at the end of year 2 at a cost of $90,000. Which process should be selected on the basis of a present worth analysis at a MARR of 12% per year? The present worth of process T is $- [678,189 The process selected on the basis of the present worth analysis is process T and the present worth of process W is $- 1,391,419

Two processes can be used for producing a polymer that reduces friction loss in engines. Process T will have a first cost of $600,000, an operating cost of $84,000 per year, and a salvage value of $80,000 after its 2-year life. Process W will have a first cost of $1,320,000, an operating cost of $25,000 per year, and a $120,000 salvage value after its 4-year life. Process W will also require updating at the end of year 2 at a cost of $90,000. Which process should be selected on the basis of a present worth analysis at a MARR of 12% per year? The present worth of process T is $- [678,189 The process selected on the basis of the present worth analysis is process T and the present worth of process W is $- 1,391,419

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

33 8 01:57:08 Two processes can be used for producing a polymer that reduces friction loss in engines. Process T will have a first cost of $680,000, an operating cost of $92,000 per year, and a salvage value of $80,000 after its 2-year life. Process W will have a first cost of $1,120,000, an operating cost of $25,000 per year, and a $120,000 salvage value after its 4-year life. Process W will also require updating at the end of year 2 at a cost of $90,000. Which process should be selected on the basis of a present worth analysis at a MARR of 12% per year? The present worth of process T is $- 7 and the present worth of process W is $- The process selected on the basis of the present worth analysis is process (Click to select)
A rotational molding operation has fixed costs of $9,000 per year and variable costs of $48 per unit. If the process is automated via conveyor, its fixed cost will be $27,000 per year, but its variable cost will be only $10 per unit. Determine the number of units each year necessary for the two operations to break even. The number of units each year necessary for the two operations to break even is determined to be
A manufacturer producer certain items at a labor cost per unit of P 125, material cost per unit is P150, variable cost of P5.00 each. If the item has a selling price of P750, how many units must be manufactured each month for the manufacturer to breakeven if the monthly overhead is P200,000?
A manufacturing company has the choice of two suppliers to buy a piece of equipment from to use in its process. Characteristics of these two suppliers and associated costs are tabulated below. The equipment from supplier A costs more to buy and maintain, but it also has more revenue per unit sold. Selling enough units will at some point make it worth the higher cost. How many units per year must the company sell in order to justify using supplier A (i.e. what is the breakeven number of units to sell)? Use an interest rate of 12% per year. Supplier A Supplier B Initial cost $4,000 $3,000 Sale price (revenue per unit) $4 $3 Transportation costs (per unit) $0 $1.25 Annual maintenance cost $1,400 $1,100 Salvage value $800 $700 Useful life of the equipment (years) 5 4
Your Area Director wants to purchase new ergonomic office equipment for your staff. The total purchase price is quoted by Herman Miller to be $22,656. The main reason for the proposed purchase is the high rate of lost work days due to low back and wrist/hand issues. These are common problems associated with poor ergonomic position and repetition. You can sell the equipment in 8 years and have a salvage value of $4,619. It is estimated that the purchase of the new equipment will cut your lost work days by 61% and save you an estimated $11,812 per year in the costs associated with the lost work days. What is your EUAW for this proposed purchase at an interest rate of 6%? A. $7,354 B. $4,886 C. $8,631 D. $6,625
Two processes can be used for producing a polymer that reduces friction loss in engines. Process T will have a first cost of $660,000, an operating cost of $90,000 per year, and a salvage value of $80,000 after its 2-year life. Process W will have a first cost of $1,100,000, an operating cost of $25,000 per year, and a $120,000 salvage value after its 4-year life. Process W will also require updating at the end of year 2 at a cost of $90,000. Which process should be selected on the basis of a present worth analysis at a MARR of 12% per year? The present worth of process T is $- and the present worth of process W is $- The process selected on the basis of the present worth analysis is process (Click to select) ✓
Dexcon Technologies, Inc., is evaluating two alternatives to produce its new plastic filament with low friction properties for creating custom bearings for 3-D printers. The estimates associated with each alternative are shown below. Using a MARR of 16% per year, which alternative has the better present worth and what is that value (select the closest value)? Method First Cost AOC, per Year Salvage Value Life DDM $170,000 $65,000 $4,000 2 years LS $350,000 $40,000 $29,000 4 years DDM with a PW--$473,000 LS with a PW --$445,900 LS with a PW --$222,055 DDM with a PW--$109,300
An IE works in the automation department of a surgical equipment manufacturing company that produces specially ordered equipment for hospitals. To upgrade the quality of the assembly process of the camera used in laparoscopic surgery probes, two approaches are available: make and buy. The make alternative has an initial equipment cost of $175,000, a life of 5 years, a $25,000 salvage value, a processing cost of $3,000 per camera, and an M&O cost of $90,000. The buy alternative requires contracting the assembly operation externally at a cost of $7,250 per camera. If the MARR is 12% per year, how many cameras per year must be assembled to justify the make alternative? 27 cameras must be assembled per year to justify the make alternative.
Two methods can be used to produce expansion anchors. Method A costs $70,000 initially and will have a $18,000 salvage value after 3 years. The operating cost with this method will be $29,000 in year 1, increasing by $4000 each year. Method B will have a first cost of $130,000, an operating cost of $6000 in year 1, increasing by $6000 each year, and a $40,000 salvage value after its 3-year life. At an interest rate of 14% per year, what are the present worth of Method A and Method B? a. PWA = $-133,655 PWB = $-129,647 PWB = $-125,178 PWB = $-129,647 PWB = $-125,178 O b. PWA $-133,655 = O C.PWA $-150,260 O d. PWA = $-150,260 =
Two methods can be used to produce solar panels for electric power generation. Method 1 will have an initial cost of $800,000, an AOC of $150,000 per year, and $125,000 salvage value after its 3-year life. Method 2 will cost $910,000 with an AOC of $125,000 and a $230,000 salvage value after its 5-year life. Assume your boss asked you to determine which method is better, but she wants the analysis done over a three-year planning period. You estimate the salvage value of Method 2 will be 40% higher after three years than it is after five years. If the MARR is 14% per year, which method should the company select? Which method should the company select?
The fixed costs by manufacturer are P800,000 per year. If ABC COMPANY in a team units sells for P 3001 and its variable cost is P2075, ( a ) how many units must be sold each year for breakeven and ( b ) what will the profit be for sales of 4000 units per year?
Question 4. Due to COVID-19 Pandemic, the economy of Finland is in a recession. The government is planning to increase government spending by 30 billion euros. Assume that marginal propensity to consume is 0.75 and there is no crowding-out effect. Define this policy measure and its consequences. Quantify the total effect of an increase in government spending on aggregate demand. Compare if the tax cut of 30 billion euros would lead to the same result. Discuss how can the crowding-out effect change the consequences of an increase in government spending.