Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Chapter 9, Problem 2P
To determine
Calculate the Annual worth.
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An existing robot can be kept if $2,000 is spent now to upgrade it for future service requirements. Alternatively, the company can purchase a new
robot to replace the old robot. The following estimates have been developed for both the defender and the challenger. The company's before-tax
MARR is 18% per year. Based on this information, should the existing robot be replaced right now? Assume the robot will be needed for an
indefinite period of time.
Defender
Current MV
Required upgrade
Annual expenses
The AW value of the defender is $
The AW value of the challenger is $
The existing robot
Annual expenses
Remaining useful life
5 years
Useful life
MV at end of useful life
-$1,400
MV at end of useful life
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 18% per year.
be replaced right now.
should not
should
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4
5
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9
10
(Round to the nearest dollar)
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info
$36.000
$2,000
$1,500
Compound
Amount
Factor…
An existing robot can be kept if $2,000 is spent now to upgrade it for future service requirements. Alternatively, the company can purchase a new robot to replace the old robot. The following estimates have been
developed for both the defender and the challenger. The company's before-tax MARR is 20% per year. Based on this information, should the existing robot be replaced right now? Assume the robot will be needed for
an indefinite period of time.
Defender
Challenger
Current MV
$38,000
Purchase price
$51,000
Required upgrade
Annual expenses
$2,000
Installation cost
$5,500
$1,400
Annual expenses
$1,000
6 years
10 years
$7,000
Remaining useful life
Useful life
MV at end of useful life
- $1,500
MV at end of useful life
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 20% per year.
The AW value of the defender is $. (Round to the nearest dollar.)
A company is evaluating the addition of equipment to its present operations. They need to
purchase equipment for $160,000. The five year MACRS GDS Recovery Method is
appropriate for the investment and the total tax rate (federal plus state) is 40%. Gross revenue
is expected to be $30,000/year while maintenance costs are expected to be $5,000/year. It is
expected that the operation will be shut down at the end of the fourth year with a salvage value
of $20,000.
a- Draw a BTCFD
b- Prepare a table showing your development of the ATCF's.
c- If the company's aftertax MARRis 12%/year, is this a profitable investment?
Chapter 9 Solutions
Engineering Economy (17th Edition)
Ch. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4PCh. 9 - Prob. 5PCh. 9 - Prob. 6PCh. 9 - Prob. 7PCh. 9 - A city water and waste-water department has a...Ch. 9 - Prob. 9PCh. 9 - Prob. 10P
Ch. 9 - Prob. 11PCh. 9 - Prob. 12PCh. 9 - Use the PW method to select the better of the...Ch. 9 - Prob. 14PCh. 9 - Prob. 15PCh. 9 - Prob. 16PCh. 9 - Prob. 17PCh. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 21PCh. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Prob. 25PCh. 9 - Prob. 26PCh. 9 - Prob. 27SECh. 9 - Prob. 28SECh. 9 - Prob. 29CSCh. 9 - Prob. 30CSCh. 9 - Prob. 31CSCh. 9 - Prob. 32FECh. 9 - Prob. 33FECh. 9 - Prob. 34FECh. 9 - Prob. 35FECh. 9 - Prob. 36FE
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