K An old forklift is due for a replacement analysis. It has a current market value $10,000. The market values and operation and maintenance costs for each of the remaining years of service are given below. The MARR is 17% per year. (a) Complete the table of marginal costs of the old forklift for each of the remaining years of service. (b) If the challenger has a minimum EUAC of $7,415, answer the two additional questions. Year 1 (a) Fill in the table below. (Round to the nearest dollar.) Forklift (Defender) MV at EOY $6,000 5,000 4,000 2,000 Click the icon to view the interest and annuity table for discrete compounding when MARR = 17% per year. Year 1 2 3 4 O&M Costs COL $4,000 4,000 4,500 5,500 Marginal Cost $

K An old forklift is due for a replacement analysis. It has a current market value $10,000. The market values and operation and maintenance costs for each of the remaining years of service are given below. The MARR is 17% per year. (a) Complete the table of marginal costs of the old forklift for each of the remaining years of service. (b) If the challenger has a minimum EUAC of $7,415, answer the two additional questions. Year 1 (a) Fill in the table below. (Round to the nearest dollar.) Forklift (Defender) MV at EOY $6,000 5,000 4,000 2,000 Click the icon to view the interest and annuity table for discrete compounding when MARR = 17% per year. Year 1 2 3 4 O&M Costs COL $4,000 4,000 4,500 5,500 Marginal Cost $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine X that will render its AW equal to that of machine Y at an interest rate of 13% per year. Determine the replacement value. Market Value, $ Annual Cost, $ per Year Salvage Value Life, Years The replacement value is $ Machine X ? -58,000 14,500 3 Machine Y 84,000 -40,000 for year 1,increasing by 2000 per year thereafter. 20,000 5
A 10-year-old backup power system is being considered for early replacement. Its current market value is $16,000. Estimated future market values (MV) and annual operating costs (AOC) for the next 5 years are given in the following table. What is the economic service life of this defender if the interest rate is Z% per year using AW analysis? Year MV AOC 1 10000 -5000 8000 -6500 6000 -8000 4 2000 -9500 -12500 [Hint: the value of Z = |last digit of your unique id+2nd digit of your unique id], Example: if your id is 201-021-651 then Z = |1+2| = 3.00%, so, interest rate will be 3.00%) 3.
A specialty concrete mixer used in construction was purchased for $300,000 7 years ago. Its annual O&M costs are $105,000. At the end of the 8-year planning horizon, the mixer will have a salvage value of $5,000. If the mixer is replaced, a new mixer will require an initial investment of $375,000. At the end of the 8-year planning horizon, it will have a salvage value of $45,000. Its annual O&M cost will be only $40,000 due to newer technology. Analyze this using an EUAC measure and a MARR of 15 percent to see if the concrete mixer should be replaced if the old mixer is sold for its market value of $65,000. a. Use the cash ﬂow approach (insider’s viewpoint approach) b. use the opportunity cost approach (outsiders viewpoint approach) Include formulas in excel screen shots.
Q9.2. For equipment that has a first cost of $10,000 and the estimated operating costs and year-end salvage values shown, determine the economic service life at i = 10% per year. Year Operating Cost, S Salvage Value, S 1 -1000 7000 -1200 5000 -1300 4500 4 -2000 3000 5 -3000 2000
Machine A was purchased 5 years ago for $90,000. Its operating cost is higher than expected, so it will be used for only 4 more years. Its operating cost this year will be $40,000, increasing by $2000 per year through the end of its useful life. The challenger, machine B, will cost $150,000 with a $50,000 salvage value after its 10-year ESL. Its operating cost is expected to be$10,000 for year 1, increasing by $500 per year thereafter. What is the market value for machine A that would make the two machines equally attractiveat an interest rate of 12% per year?
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$250,000 is invested in equipment having a salvage value equal to $250,000(0.80n) after n years of use. O&M costs equal $60,000 the first year and increase $8,000 per year. Based on a MARR of 10%, what are the optimum replacement interval and minimum EUAC?
A replacement analysis is most objectively conducted from the viewpoint of:a. an outsider.b. a consultant.c. a non-owner.d. any of the above.
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With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine X that will render its AW equal to that of machine Y at an interest rate of 12% per year. Determine the replacement value. Machine X Machine Y Market Value, $ ? 93,000 -40,000 for year 1,increasing by 2000 per year thereafter. Annual Cost, $ per Year -57,000 Salvage Value 18,500 20,000 Life, Years 3 The replacement value is $
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