Consider a machine that costs $1000 to purchase. The machine creates an annual operating expense of $500 at the end of first year, which is going to increase by $50 in each year thereafter. The salvage value of this machine is $200, independent of the usage period. Find the economic life of this machine under nominal MARR 25%, compounding annually. A 8 9. 7 E 6
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NOMINAL MARR
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- A company wants to renew its old natural gas fired boiler. According to the receivedprice offer, the new boiler is 400,000 TL in cash. The natural gas consumption of this boiler is 15m3/hour and the price of natural gas is 1.1 TL/m3. The annual real price escalation of natural gas is determined as 1%. The annual cost of the boiler operation and maintenance costs is 25,000 TL and the annual escalationvalue is 17%. By purchasing a new boiler, some of the costs of the old boiler will be saved. The old boiler has costs of 250,000 TL increasing by 15% annually. The new boiler will run for 6,000 hours a year. The annual discount rate is 24% and the annual inflation rate is 17%. Determine whether it is economically feasible to purchase the new boiler by using the annual worthmethod, taking into account the 10-year costs and savings. Use real ratesfor relevant parameters in calculations.Your company is considering the purchase of a 30-tonne hoist. The first cost is expected to be $230,000. Net savings will be $38,000 per year over a 12-year life and will be salvaged for $32,715. If the company's after-tax MARR is 8% and it is taxed at 45%, what is the future worth (FW) of this project? Note: You will have to calculate the CCA depreciation rate from the information provided.Item A is currently in use at a plant. The original cost of the piece of machinery was $2,000. Its maintenance cost is $500 this year, increasing each year by $30. Items A can be replaced by Item B which has a current cost of $3,500. Item B has no annual maintenance costs, but it is anticipated that the item purchase cost increases by $50 per year. Disregarding income taxes effects (such as depreciation), what is the predicted optimum time (after year 'X') to schedule a replacement of Item A with Item B. Use 8% as the 'interest rate', which really is the value of money to the company. a. 5 years b. 6 years c. 7 years d. 8 years
- A special purpose NASA fuel cell requires an investment of $80,000 and hasno MV at any time. Operating expenses in year k are given by Ck = $10,000 +$6,000 (k - 1). Obsolescence is reflected in increased operating expenses andis equivalent to $4,000 per year—this expense has not been included in theequation for Ck. Solve, a. Determine the economic life of the fuel cell if i = 0%. b. Repeat Part (a) when the $4,000 per year is ignored. What can you conclude about the influence of an expense that is constant over time on the economic life?A piece of new equipment has been proposed by engineers to increase the productivity of a certain manual welding operation. The investment cost is $25,000, and the equipment will have a market value of $5,000 at the end of a study period of seven years. Increased productivity attributable to the equipment will amount to $8,000 per year after extra operating costs have been subtracted from the revenue generated by the additional production. 1-1 If the firm's MARR is 20% per year, is this proposal a sound one? Use the PW method.A new machine will cost $200,000. Its maximum useful life is 8 years. The expected market value (MV) of the machine at the end of year 1 is $100,000, and it is expected to decline by $15,000 each year afterwards. The annual operating cost (AOC) is projected to be $75,000 during the first year of operation, and it is expected to rise by 15% every year afterwards. Assuming 11% minimum attractive rate of return, calculate the economic service life of the machine. Your calculations need to include a table with the following columns: Year, MV, AOC, Capital Recovery, Annual Worth (AW) of AOC, and Total AW. Illustrate your analysis with a properly labeled chart, featuring the number of years of service on the horizontal axis, and capital recovery, annual worth of the AOC, and total annual worth on the vertical axis (click to format the vertical axis and check the box “Values in reverse order” so that the axis displays rising cost as movement up). Please provide a written statement clearly…
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- Machine X costs $248,751 with annual operating and maintenance costs of $9,980. Machine Y costs $264,500 with annual operating and maintenance costs of $5120. Both machines are Class 43 (CCA=30%). The company needs the machines for 11 years, after which machine X can be sold for $12,257 and machine Y can be sold for $13,033. The company’s MARR is 10%, and its tax rate is 27%. Do an after-tax analysis to determine which machine should be purchased.06. J. Timberlake Corporation needs a special manufacturing machine for its production plant. The company may purchase the machine for P500 000.00 and have it installed at a cost of P50 000.00. The machine will incur an annual cost of P35 000.00 for maintenance and repair, and is expected to be used for eight years and then sold for P50 000.00. The company may also rent the machine at P115 000.00 per year payable at the end of each year. If the machine is rented, costs of installation and repair shall be shouldered by the lessor, however a fee of P20 000.00 per year payable at the end of each year will be charged for basic maintenance. If the company requires an 11% MARR on its investments, determine the better alternative using PW analysis. (Ans. It is advantageous to rent, - P694 726.57; - P708 417.97) 07. Same as problem number 6 except that the lease requires that rent payment be given in advance (at the start of each year). (Ans. It will be advantageous to purchase,- P708…Jumbo Company uses 1,100 units of an particular item each year. Carrying the item in inventory costs $200 per unit per year. It costs $150 for each order of the chemical. The firm uses the item at a constant rate each year. Calculate the Economic Order Quantity AND Use the data from problem above and assume that Jumbo Company operates 250 days per year. Also assume that its total usage is 1,100 units per year. There is a lead time of 2 days and Jumbo desires to keep a safety stock of 4 units. Calculate the reorder point