Alternative X has a first cost of 22000 an annual operating cost of 4100 , and a salvage value of 6825 after 27 year. Alternative Y has a first cost of 23000 an annual operating cost of 4200 , and a salvage value of 16560 after 27 year. If MARR of 27% per year, approximately what is the PW of each alternative?
Q: a machine can be purchased at $15000 The annual maintenance costs are expected to increase by $800…
A: The value at which an asset is expected to be sold at the end of its useful life is known as salvage…
Q: The investment cost of a new product line is $300000. The annual operating cost is estimated to be…
A: given, initial cost = $300,000 annual operating cost = $150,000 n = 6 r = 14% salvage value = 14%…
Q: Annual Operating Cost 15,000 20,000 $ per year Expected salvage value $ 5,000 10,000 Expected use,…
A: Initial Outlay It refers to the fledgling amount to start a new project, and it is the basic…
Q: the first cost of a machine is 50,000 and if has a depreciation of 4,500 per year. if the salvage…
A: Depreciation is decrease in value of an asset over a period of time due to use of asset in business.…
Q: maintenance costs of this equipment are estimated to be about $25,000 per year. Salvage value is…
A: EUAC is uniform annual equivalent cost that is equivalent to all costs of equipment.
Q: D0 and has a residual value of $80,000 after six years of use. The amon iation generated by the…
A: Accounting Rate of Return (ARR) calculates the return on project by dividing the accounting return…
Q: Alternative X has a first cost of 19000 an annual operating cost of 3500 , and a salvage value of…
A: The Present worth analysis is used by discounting their cash flow at a single of point of time at…
Q: Calculate the equal, end-of-period, annual cost of a machine which costs $75000 initially and will…
A: The present value is the value of the sum received at time 0 or the current period. It is the value…
Q: $250,000 is invested in equipment having a negligible salvage value regardless of the number of…
A: MARR is minimum acceptable rate of return or hurdle rate is minimum required return which manager…
Q: A challenger asset with a maximum useful life of 6 years has a first cost of $43,000 and an…
A: Equivalent uniform annual cost comprise of annual equivalent uniform of first cost less annual…
Q: $500,000 is invested in equipment having a salvage value equal to $500,000(0.80n) after n years of…
A: The frequency of replacements that will minimize EUAC is the optimum replacement interval . Minimum…
Q: A remotely situated fuel cell has an installed cost of BD2,000 and will reduce the existing expen:…
A: Salvage value is the book value of an asset (like an equipment or a machinery) after all…
Q: breakeven an investment
A: Payback period = Initial investment/Annual cash inflows per year
Q: Margaret has a project with a $28 000 first cost that returms $5000 peryea overits 10-yea life. It…
A: given, initial cost = $28000 n = 10 annual return = $5000 salvage value = $3000 r=5%
Q: At i = 15% per year, a machine has a first cost of $15,000 and estimated operating costs and…
A:
Q: EXCEL, an equipment costing $100,000 has a useful life of 6 years. It has a resale value of $8,000.…
A: given information equipment costing = $100,000 useful life= 6 years resale value = 8000 annual cost…
Q: Using a compound interest of 8%, find the equivalent uniform annual cost for a proposed machine that…
A: The yearly cost of owning and sustaining an asset is calculated by dividing the net present value of…
Q: Colaw Company is considering buying equipment for $240,000 with a useful life of five years and an…
A: THE AVERAGE INVESTMENT METHOD DIVIDES THE AVERAGE INFLOW OR INCOME EXPECTED FROM THE PROJECT BY THE…
Q: An asset which has a first cost of RM 40,000 is expected to have an annual operating cost of RM…
A: Data given: First cost =RM 40,000 Annual operating cost = RM 15,000 Rate=20%
Q: Two alternatives are being considered for installation. Which should be selected based on an…
A: Under Capital budgeting decision, when the life of alternative projects is not same, equivalent…
Q: The initial cost of a new machine is $10,000. The annual operating cost is $1,000/yr for first 3…
A: Equivalent uniform annual cost EUAC distributes the total cost of the project in term of annual cost…
Q: One of two methods must be used to produce expansion anchors. Method A costs $80,000 initially and…
A: Given information is: Method A costs $80,000 initially and will have a $15,000 salvage value after 3…
Q: A motorcycle costs P50,000 and has an expected life of 10 years. The salvage value is estimated to…
A: In the given question, appropriate rate of return on investment is required. It implies that…
Q: A machine costs $10,000, has a useful life of 7 years and a salvage value of $1000.00 at the end of…
A: The formula for EUAC = r*NPV/(1-(1+r)^(-n)) Let us first find the NPV. Rate = 9.8% compounded…
Q: What is the value of the FW for an alternative which is at an interest rate of 8% per year if first…
A: Future Worth Analysis is the method for determining the future value of present cash flows invested…
Q: The estimated cost of a completely installed and ready-to-operate 40-kilowatt generator is $30,000.…
A: The calculation is:
Q: The initial investment cost of machine A is 9,000 TL, the useful life of the machine is 6 years and…
A: Time value tells that money received today is of more value than that of receiving exact value later…
Q: The estimated cost of a completely installed andready-to-operate 40-kilowatt generator is $32,000.…
A: The capital budgeting is a technique that helps to analyze the profitability of the project.
Q: Alternative X has a first cost of $30,000, an operating cost of $9,000 per year, and a $5,000…
A: The present value of the annuity is the current worth of a cash flow series at a certain rate of…
Q: With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine…
A: EAC of cost machine X =(Cost-Salvage value)×Discount rate(1-(1+Discount rate)-n+Salvage…
Q: An asset with a first cost of $20,000 has an annual operating cost of $12,000 and a $4000 salvage…
A: Annuity refers to series of annual payment which are paid or received at start or end of specific…
Q: Alternative I has a first cost of $50,000, will produce an $18,000 net annual benefit over its…
A: GIVEN, r=15% year I II 0 -50000 -1,50,000 1 18000 2 18000 3 18000 4 18000 5…
Q: Suppose that the new equipment has a cost basis of $12,000 and a salvage value of $3,0 of 6 years.…
A: The cash flow that is produced by the equipment consider the tax benefits of the depreciation so…
Q: A "standard" model of a dozer costs $20,000 and has an annual operating expense of $450. The dozer…
A: Opportunity cost = 5% As per information Calculation of present value of each option Year…
Q: An interest rate of 15% is used to evaluate a new system that has a first cost of $212,400, annual…
A: The present worth is the sum of the discounted cash flows of the project.
Q: An injection molding system has a first cost of $200,000 and an annual operating cost of $69,000 in…
A: ESL refers to economic service life of the new equipment. To determine ESL, AW of the asset is…
Q: What is the annual equivalent cost of purchasing a lift truck that has an initial cost of $85,000,…
A: Annual Equivalent Cost (EAC) refers to the value which shows the estimated annual expense for…
Q: Alternative X has a first cost of 36000 an annual operating cost of 6900 , and a salvage value of…
A: A method of capital budgeting that helps to evaluate the present worth of cash flow and a series of…
Q: Calculate the present worth of a machine which costs $74000 initially will have a $14000 salvage…
A: In this we have to calculate effective annual interest rate and find out present value.
Q: With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine…
A: The question is based on the concept of calculation of annual worth of two machine for replacement…
Q: $500,000 is invested in equipment having a negligible salvage value regardless of the number of…
A: Present value computes the existing value of future benefits by discounting future worth with a…
Q: Alternative R has a first cost of $94,000, annual M&O costs of $66,000, and a $20,000 salvage value…
A: Introduction:- An alternative cost is a probable benefit that could have been acquired but wasn’t…
Q: A new machine can be purchased for $50.000. Its expected useful life is seven years, with a salvage…
A: AW is the equivalent annual value of a project over its lifetime.
Q: A new airconditioning unit costs P150,000 and will have a salvage value of P15,000 after 5 years.…
A: The question is based on the concept of Annuity and Present value in Financial Management. Annuity…
Q: ₱50000 is invested in a machine, in which it has an annual total cost of ₱3000 and a salvage value…
A: Solution:- Calculation of the equivalent uniform annual cost of this cycle as follows under:-
Q: A conveyor system costs $110,000 to install. The salvage value of the conveyor system decreases by…
A: The EUAC and ORI is Computed by finding out the Present value and the EUAC for each of the year. The…
Step by step
Solved in 3 steps with 2 images
- 1. Compare the following alternatives using the Net Present Worth (NPW) method. Rate 5% per year. Construction $ Benefits $/yr Life years A 400,000 200,000 5 700,000 220,000 10 2. Solve the same problem using the Net Equivalent Uniform Annual (NEUA) method. What do you conclude?If the minimum attractive rate of return is 7%, calculate the incremental rate of return. A ($) B ($) First Cost 5000 9200 Uniform Annual Benefit 1750 Useful Life (Years) 4 1850 8Compare the following two alternatives by the IRR method, given MARR of 6%/year. First find if they are feasible and then compare them with the incremental rate of return (AROR). Alt. Construction cost $ Benefits $/yr Salvage $ Service Life (yrs) A 410,000 55,000 20,000 11 B 250,000 35,000 10,000 11
- For a project with: F.C. = JD 4000 Extra cost at the end of the 4 year = 2500 Annual income = 2000 n= 5 years a) Calculate the IRR (i*) b) is it acceptable, if MARR=10% per year?Assume $100,000 is available for investment and MARR =10% per year. If alternative A would earn 25% per year on inveatment of 60,000 and B would be earn 20% per year on investment of 75000 the weighted average(ROR) of AAn investment opportunity has an initial cost of $2. 4M and a uniform annual benefit of $600,000 over 6 years. Using a MARR of 10%, what is the benefit- cost ratio of this opportunity? Would you recommend it be pursued? Why or why not?
- 5. Compare the following two alternatives by the IRR method, given MARR of 6%/year. First find if they are feasible and then compare them with the incremental rate of return (AROR). Alt. Benefits S/yr Salvage S Service Life (ys) Construction cost $ 410,000 55,000 20,000 11 B 250,000 35,000 10,000 11Asutte S90,000 is avialable for investment and MARR= 10% per yoar, If altemative Awould eam 35% per yoar on an investment of $50,000, and B woukd oam 2 per year on an invintment of s85.000, What are the weighted averages for A and 8? Which investment in better economicalty? v Overall RORA v Overal RO v Which nesnerd in better economicaty A 20 % 8. 10 3% CAllemative 0.33 3% E Allermative A F. 28 3NTwo alternatives are being considered: B First cost Uniform annual benefit Useful life, in 5000 9600 1750 1850 4 8 years If the minimum attractive rate of return is 7%, which alternative should be selected? Solution: 1. Use the increment analysis, we should use 2. Terms n= 3. The Increment CFD has 3 basic patterns: O AP= O AA= O AF= occurred at end of year 4. AROR= % 5. Choose Please answer all parts of the question.
- Consider alternatives A and B as shown below. The interest rate is 9%. For parts a) and b), let X = $250. For parts a) and b), which alternative is preferred: a) by equivalent annual worth analysis? b) by payback period? c) Compute the value of X that makes the two alternatives equally desirable. Initial cost Uniform annual benefit Salvage value Useful life, in years A $500 200 100 5 B $900 X 120 5Suppose an investment has an initial capital cost of $1100, an ongoing cost of $6.50 per year and an annual benefit of $80. If the project lasts for 20 years and the discount rate is 7%, the internal rate of return is: Provide your answer in percentage form (e.g. an IRR of 17.66% should be entered as 17.66) to 2 decimal places. Do not include any $ or % 's in your response.Find the Annual Equivalent Worth AEW for the indefinite project described by (jo» ND-), G, Nc-l»? Assume a MARR of 12% for the project. For the defender, the AEC are described below on the left side. For the challenger, the AEC are described on the right side. 5400 N=1 5100 5350 N=2 4900 5200 N=3 4800 5300 N=4 5300 5500 N=5 5900