Two methods can be used for producing expansion anchors. Method A costs $65,000 initially and will have a $15,000 salvage value after 3 years. The operating cost with this method will be $30,000 per year. Method B will have a first cost of $130,000, an operating cost of $8,000 per year, and a $40,000 salvage value after its 3-year life. At the MARR of 12% per year, which method should be used on the basis of a present worth analysis? The present worth of method A is $- and the present worth of method B is $- The method to be selected on the basis of a present worth analysis is method A

Two methods can be used for producing expansion anchors. Method A costs $65,000 initially and will have a $15,000 salvage value after 3 years. The operating cost with this method will be $30,000 per year. Method B will have a first cost of $130,000, an operating cost of $8,000 per year, and a $40,000 salvage value after its 3-year life. At the MARR of 12% per year, which method should be used on the basis of a present worth analysis? The present worth of method A is $- and the present worth of method B is $- The method to be selected on the basis of a present worth analysis is method A

Name: Hand written solutions are strictly prohibited Two methods can be used
Uploaded: 2024-03-20T06:50:59.000Z
Channel: Bartleby
Description: Hand written solutions are strictly prohibited Two methods can be used for producing expansion anchors. Method A costs $65,000 initially and will have a $15,000 salvage valueafter 3 years. The operating cost with this method will be $30,000 per year.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 5P

See similar textbooks

Similar questions

Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.
One of two methods must be used to produce expansion anchors. Method A costs $80,000 initially and will have a $15,000 salvage value after 3 years. The operating cost with this method will be $30,000 per year. Method B will have a first cost of $120,000, an operating cost of $8000 per year, and a $40,000 salvage value after its 3-year life. At an interest rate of 12% per year, which method should be used on the basis of a present worth analysis? Also, write the two spreadsheet functions to perform the PW analysis.
One of two methods must be used to produce expansion anchors. Method A costs $75,000 initially and will have a $19,000 salvage value after 3 years. The operating cost with this method will be $23,000 per year. Method B will have a first cost of $110,000, an operating cost of $19,000 per year, and a $31,000 salvage value after its 3-year life. The interest rate for both the methods is 11%. Which method should be used on the basis of a present worth analysis? The present worth of method A is (about -117,000) and that of method B is (is not about -172,000)
An engineer has designed 2 alternative systems to cater for customer's plant operation. System 1 will need initial investment of $150,000 and will have an annual operating cost of $20,000 with salvage price of $5,000 after 4 years. System 2 will need an investment of $180,000 and the annual operating cost will be $15,000. System can be salvaged for $8,000 after 6 years. At an interest rate of 10% per year, which system should be proposed by the engineer on the basis of a present worth analysis? Use equations to solve this problem.
A project has an initial investment of $45,000. This project needs an annual spending of $6,000 to generate an annual revenue of $18,000 for six years. Moreover, the project is expected to return $12,000 as a salvage value at the EOY 6. Calculate the AW using MARR of 10%
A "standard" model of a dozer costs $20,000 and has an annual operating expense of $450. The dozer will be replaced in 6 years when the salvage value is expected to be $2,000. A "super" model can be purchased for $25,000, but will have a salvage value of $7,000 when retired in 6 years. Its operating expenses are also $450 a year. The purchaser's other investment opportunities are 5%. Compare these alternatives by using the annual equivalent method.
Estimates for one of two process upgrades are as follows: First Cost = Php 40,000 Annual Cost = Php 5,000 Market Value = (-)Php 2,000/ year Salvage Value = Php 20,000 after 10 years. If a 4-year study period is used for AW analysis at 15% per year, what is the AW value?
A new alloy can be produced by Process A, which costs $200,000 to implement. The operating cost will be $10,000 per quarter with a salvage value of $25,000 after its 2-year life. Process B will have a first cost of $250,000, an operating cost of $15,000 per quarter, and a $40,000 salvage value after its 4-year life. The interest rate is 8% per year compounded quarterly. What is the present value difference between A and B?
A truck can be purchased for $55,000. Annual O&M costs are expected to increase by $1,800 every year, with a 1st-year O&M cost of $4,000. (MARR = 26% and the planning horizon is 10 years) • The compressor salvage value for a given period t is calculated based on the following equation: Salvage value (t) = $30,000– $3,000 * t a) Find the Optimum Replacement Interval for this Equipment b) Find the Optimum Replacement Interval for this Equipment if the O&M costs are decreased to $1,700/yr. What is your conclusion? c) Find the Optimum Replacement Interval for this Equipment if the initial cost is reduced to $52,000. What is your conclusion? (independent of part b)
A new die press machine costs $ 150,000, and lasts 8 years with salvage value of $20,000. Annual operating costs are $50,000. If you want to make a 10% return on investment, what is the minimum annual revenue required from this machine?
The initial investment cost of machine A is $ 9,000 and the useful life of the machine is 6 years and annually.operating costs are $ 5,000. The initial investment cost of machine B is 16.000 $ and 9 yearsAt the end of its useful life, the machine can be sold for $ 4,000. Operation of machine BSince their cost is $ 4,000 per year, the alternative lifetimes of the machines areBased on an analysis time as much as a solid (EKOK), two machines according to the present value analysis.compare. Interest rate 10% per year (Answer: MSD (A) = 57,954 $; MSD (B) = 53,175 $)