Practice 1 In-place overhead crane that cost $350,000 three years ago can be purchased used on international market for about $200,000 now. Asset had a book value of $165,000 last year and $95,000 this year. Estimated salvage is $20,000 in 5 years. What is defender's first cost for a replacement study?
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- Reference: Case Study S Dunn Manufacturing is considering the following two alternatives. The cost information for the two proposals for replacing an equipment are provided are in table below. Initial cost Benefits/year Machine X $120,000 $20,000 for the first 10 years and $9,000 for the next 10 years Life Salvage value $40,000 MARR 5.2. The NPW of machine X is A) $35,158 B) $48,192 C) $50,752 Machine Y $96,000 $12,000 per year for 20 years. 20 years 8% $20,000I need the solution in handwriting The following are the cost of a system and the useful life is five years. The salvage value for depreciation purpose is equal to 25% of the hardware cost Item Cost Hardware $170,000 Training Installation $18,000 $18,000 a) What is the book value of the system at the end of year three if Straight line method is used? b) Suppose that after depreciation of the system for two years with straight line, the company decides to switch to the decline method for the reminder of the system life (depreciation rate 30%). What is the system Book Value at the end of four years? (You have been asked to evaluate two alternatives, X and Y, that may increase plant capacity for manufacturing high-pressure hydraulic hoses. The parameters associated with each alternative have been estimated. Which one should be selected on the basis of a present worth comparison at an interest rate of 13% per year? Why is yours the correct choice? Alternative First Cost X $-45,000 Maintenance cost, per $-9000 Year Salvage Value $1,000 Life 5 years Y $-55,000 $-4000 $6,500 5 years The present worth of alternative X is $ 13888 and that of alternative Y is $ 44459.4 Alternative X is selected by the company.
- Assume that management is evaluating the purchase of a new machine as follows: Cost of new machine: $800,000 Residual value: $0 Estimated total income from machine: $300,000 Expected useful life: 5 years The average rate of return of a new equipment is _____.The Fence Company is setting up a new production line to create top rails. The relevant data for two alternatives are shown below. Flow Line Manufacturing Cell Installed Cost Expected Life Salvage Value Variable Cost per Top Rail Click here to access the TVM Factor Table Calculator $15,000 5 years $0 $6.00 $10,000 5 years $0 $7.00A firm is trying to decide which of two machines to purchase as described in in the table below. Using the interest rate 9% or 0.09, use present worth analysis to determine which machine, if either, should be purchased. Show all your work. Machine: A - B First Cost: $800 - $600 Annual Net Benefit: $130 - $230 Salvage Value: $40 - $20 Usefil Life (years): 9 - 3
- A solid-waste recycling plant is considering two types of storage bins using an MARR of 10% per year. (a) Use ROR evaluation to determine which should be selected. (b) Confirm the selection using the regular AW method at MARR = 10% per year. Storage Bin P Q First cost, $ −18,000 −35,000 AOC, $ per year −4000 −3600 Salvage value, $ 1000 2700 Life, years 3 6onsider the following financial informationabout a retooling project at a computer manufacturing company:• The project costs $2.5 million and has a five-yearservice life.• The retooling project can be classified as sevenyear property under the MACRS rule.• At the end of the fifth year, any assets held for theproject will be sold. The expected salvage valuewill be about 10% of the initial project cost.• The firm will finance 40% of the project moneyfrom an outside financial institution at an interestrate of 10%. The firm is required to repay the loanwith five equal annual payments.• The firm’s incremental (marginal) tax rate on theinvestment is 35%.• The firm’s MARR is 18%.With the preceding financial information,(a) Determine the after-tax cash flows.(b) Compute the annual equivalent worth for thisproject.You have been asked to evaluate two alternatives, X and Y, that may increase plant capacity for manufacturing high-pressure hydraulic hoses. The parameters associated with each alternative have been estimated. Which one should be selected on the basis of a present worth comparison at an interest rate of 10% per year? Why is yours the correct choice? Alternative First Cost Maintenance cost, per Year Salvage Value Life X $-25,000 $-8000 $1,000 5 years Y $-55,000 $-2000 $2,000 5 years and that of alternative Y is $1 The present worth of alternative X is $. Alternativ (Click to select) is selected by the company.
- Required information A land development company is considering the purchase of earth-moving equipment. This equipment will have an estimated first cost of $163,000, a salvage value of $55,000, a life of 10 years, a maintenance cost of $32,000 per year, and an operating cost of $220 per day. Alternatively, the company can rent the necessary equipment for $1010 per day and hire a driver at $180 per day. When approached to rent for the breakeven number of days, the equipment owner indicated that the minimum rental is for 100 days per year; however, he might consider a lower daily rental cost. What is the daily rental cost to justify renting over purchasing? If the equipment was purchased, assume it would be used for the breakeven number of days. Determine the required rental cost per day. The daily rental cost to justify renting over purchasing is determined to be $SUBJECT: ENGINEERING ECONOMICS PLEASE PROVIDE A COMPLETE SOLUTION FOR LETTERS C, D, AND E. THE FINAL ANSWER IS ALREADY GIVEN. THANK YOU A Machine costs ₱80,000 and an estimated life of 10 years with a salvage value of ₱5,000. What is the book value after 5 years using the following methodology?Two pumps are being considered for purchase for a service life of 10 years. Interest rate is 5%. Alternatives Pump 1 Pump 2 Initial Cost $60,000 $75,000 Estimated salvage value at end of useful life $10,000 $12,000 Useful Life 6 years 12 years Estimated market value, end of 10-year $12,000 $15,000 Apply the present worth technique, which pump should be considered? Solution: 1. Neither input nor output is the same, calculate the net present worth (NPW) 2. NPW;: o Initial cost: PW= o Equivalent PW for salvage and replacement together: PW= k; o Cash flow at the end of 10 years, PW= k; o Thus NPW = k. 3. NPW2: o Initial cost: PW= o Equivalent PW for salvage and replacement together: PW= k; o Cash flow at the end of 10 years, PW= k; o Thus NPW2= k. 4. Hence use