Engineering Economy (16th Edition) - Standalone book
Engineering Economy (16th Edition) - Standalone book
16th Edition
ISBN: 9780133439274
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Chapter 7, Problem 48P
To determine

Calculate the present value of EVA.

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Peachtree Construction Company, a highway contractor, is considering the purchase of a new trench excavator that costs 300000 and can dig a 3-foot-wide trench at the rate of 16 feet per hour. The contractor gets paid according to the usage of the equipment, 100 per hour. The expected average annual usage is 500 hours, and maintenance and operating costs will be 10 per hour. The contractor will depreciate the equipment by using a five-year MACRS, units-of-production method. At the end of five years, the excavator will be sold for 100000. Assuming the contractor’s marginal tax rate is 25% per year, determine the ­annual after-tax cash flow. In excel.
AMI, Inc., IS Considering the purchase ot a digital camera tor maintenance of design specitfications by teeding digital pictures directiy into an engineering workstation where computer-aided design files can be superimposed over the digital pIctures. Dittferences between the two images canbe noted, and corrections, as appropriate, can then be made by design engineers a. You have been asked by management to determine the PW of the EVA of this equipment, assuming the following estimates: capital investment = $326,000; market value at end of year six=$122,000, annual revenues = $122,000; annual expenses = $8,000; equipment life = 6 years;effective income tax rate = 25%, and after-tax MARR=8% per year. MACRS depreciation will be used with a five-year recovery period.b. Compute the PW of the equipment's ATCFs.
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Engineering Economy (16th Edition) - Standalone book

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