ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Chapter 13, Problem 13P
To determine
To find: Economic life of grape press.
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Students have asked these similar questions
Downtown Abbey Corp. wants to buy a new sheep-shearing machine. It has narrowed down the choice to two machines that can do the job equally well:
Machine name
The Shearilizer
Naked Sheep
Purchase price
10,000
20,000
Useful life (years)
4
7
Maintenance cost (end of each year)
4,000
3,000
The relevant discount rate is 10%. There are no taxes.
What is the net present value of all costs associated with the Shearilizer (in absolute terms)?
What is the equivalent annual annuity for the Shearilizer (in absolute terms)?
What is the equivalent annual annuity for the Naked Sheep (in absolute terms)?
Which machine should the company buy?
The one with the higher equivalent annual cost
The one with the lower equivalent annual cost
Problem # 1
A machine has a first cost of $10,000. Its market
value declines by 20% annually. The repair costs
are covered by the warranty in Year 1, and then they
increase $600 per year. The firm's MARR is 15%.
Find the minimum EUAC for this machine and its
economic life.
9. An injection - molding machine has a first cost of $1,050,000 and a salvage
value of $225,000 in any year. The maintenance and operating cost is
$235,000 with an annual gradient of $75,000. The MARR is 10%. What is
the most economic life? (Review Chapter 13)
Chapter 13 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 13 - Prob. 1QTCCh. 13 - Prob. 2QTCCh. 13 - Prob. 3QTCCh. 13 - Prob. 4QTCCh. 13 - Prob. 5QTCCh. 13 - Prob. 1PCh. 13 - Prob. 2PCh. 13 - Prob. 3PCh. 13 - Prob. 4PCh. 13 - Prob. 5P
Ch. 13 - Prob. 6PCh. 13 - Prob. 7PCh. 13 - Prob. 8PCh. 13 - Prob. 9PCh. 13 - Prob. 10PCh. 13 - Prob. 11PCh. 13 - Prob. 12PCh. 13 - Prob. 13PCh. 13 - Prob. 14PCh. 13 - Prob. 15PCh. 13 - Prob. 16PCh. 13 - Prob. 17PCh. 13 - Prob. 18PCh. 13 - Prob. 19PCh. 13 - Prob. 20PCh. 13 - Prob. 21PCh. 13 - Prob. 22PCh. 13 - Prob. 23PCh. 13 - Prob. 24PCh. 13 - Prob. 25PCh. 13 - Prob. 26PCh. 13 - Prob. 27PCh. 13 - Prob. 28PCh. 13 - Prob. 29PCh. 13 - Prob. 30PCh. 13 - Prob. 31PCh. 13 - Prob. 32PCh. 13 - Prob. 33PCh. 13 - Prob. 34PCh. 13 - Prob. 35PCh. 13 - Prob. 36PCh. 13 - Prob. 37PCh. 13 - Prob. 38PCh. 13 - Prob. 39PCh. 13 - Prob. 40PCh. 13 - Prob. 41PCh. 13 - Prob. 42PCh. 13 - Prob. 43PCh. 13 - Prob. 44PCh. 13 - Prob. 45PCh. 13 - Prob. 46PCh. 13 - Prob. 47PCh. 13 - Prob. 48PCh. 13 - Prob. 49PCh. 13 - Prob. 50PCh. 13 - Prob. 51PCh. 13 - Prob. 52PCh. 13 - Prob. 53PCh. 13 - Prob. 54PCh. 13 - Prob. 55PCh. 13 - Prob. 56P
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- On March 17, 2013, the Wildcat Oil Company began operations at its Louisiana oil field. Theoil field had been acquired several years earlier ata cost of $32.5 million. The field is estimated tocontain 6.5 million barrels of oil and to have a salvage value of $3 million both before and after all ofthe oil is pumped out. Equipment costing $480,000was purchased for use at the oil field. The equipment will have no economic usefulness once theLouisiana field is depleted; therefore, it is depreciated on a units-of-production method. In addition,Wildcat Oil built a pipeline at a cost of $2,880,000to serve the Louisiana field. Although this pipelineis physically capable of being used for many years,its economic usefulness is limited to the productivelife of the Louisiana field; therefore, the pipelinehas no salvage value. Depreciation of the pipelineis based on the estimated number of barrels of oil tobe produced. Production at the Louisiana oil fieldamounted to 420,000 barrels in 2015 and…arrow_forwardA machine that was used for 8 years has a market value of $2500 now, which decreases by $100 each year for the next 5 years. Maintenance costs this year are $5k, and for the next 5 years they are estimated at $6k, $7k, $8k and $9k. Determine the marginal cost of extending the service for two years if the MARR is 12%. Fill the whites with the results. a) Fill the whites: The loss of value in the market in year 2 is $ The loss in interest in the year 2 $ . The Marginal Cost in year 2 is $ b) If the minimum EUAC of the machine is $5500, when should the machine be replaced? Anus . (0,1,2,3,4 or 5)arrow_forwardA machinge has a first cost of $24,000. Its market value declines by 20% annually. The repair costs are covered by the warranty in Year 1, and then they increase $900 per year. The firm's MARR is 12%. Find the minimum EUAC for this machine and its economic life.arrow_forward
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