ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
expand_more
expand_more
format_list_bulleted
Question
Chapter 13, Problem 30P
(a)
To determine
To find: The asset’s new economic life.
(b)
To determine
To find: The time when the existing asset should be replaced with the new one.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Consider an asset that you purchase for $145,153. Its nominal resale value after 6 years of ownership is $34,055. At that time you plan to sell it and invest the proceeds elsewhere. What is the net present cost to you of holding this asset if the nominal discount rate is 6%?
What should you do if you own a factory building that currently is generating a perpetual annual cash flow of $60 and your discount rate is 5%. The building has been fully depreciated.
You can keep the building.
You can sell the building for $1,100.
You can spend $300 to renovate the building to increase the annual cash flow by an extra $20 a year. You can ignore taxes.
Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote.
Modifying an assembly line has a first cost of $165,000 and its salvage value is $0. The firm’s interest rate is 10%. The savings shown in the table depend on whether the assembly line runs one, tow, or three shifts and on whether the product is made for 8 or 10 years. Calculate the expected present worth. Round to the nearest cent.
Shifts/day
Savings
P(S)
Useful Life
P(L)
1
$27,500
25%
8
65%
2
$30,000
40%
10
35%
3
$32,500
35%
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
Knowledge Booster
Similar questions
- SAUCE uses 300,000 units of part X a year. Average purchase lead time is 20 working days while maximum is 27 working days. The firm's annual operations cover 240 days allowing for shutdowns for plant maintenance, holidays and Sundays. The firm wants to keep safety stock to guard against stock outs. What is the safety stock in units?arrow_forwardWhat is the role of technological change in asset improvement?arrow_forwardThese are sold for the last time, and these are not for further processing or manufacturing.arrow_forward
- Jane quit her job at IBM where she earned $50,000 a year. She cashed in $50,000 in corporate bonds that earned 10% interest annually to buy a mini-bus. Jane has decided to buy the mini-bus and set up a commuter service between Lincoln and Omaha. There are 1000 people who will pay $400 a year each for the commuter service; $280 from each person goes for gas, maintenance, insurance, depreciation, etc. What are Jane's total revenue? A. $600,000 B. $250,000 C. $400,000 D. $480arrow_forwardA new bottle-capping machine costs $45 000, including $5000 for installation. The machine is expected to have a useful life of eight years with no salvage value at that time (assume straight-line depreciation). Operating and maintenance costs are expected to be $3000 for the first year, increasing by $1000 each year thereafter. Interest is 12 percent. What is the economic life of the bottle capper?arrow_forwardPlease see the attached7arrow_forward
- A new bottle-capping machine costs $45 000, including $5000 for installation. The machine is expected to have a useful life of eight years with no salvage value at that time (assume straight-line depreciation). Operating and maintenance costs are expected to be $3000 for the first year, increasing by $1000 each year thereafter. Interest is 12 percent. What is the economic life of the bottle capper? Note: don't use chat gptarrow_forwardA car is purchased for $9 520. It is expected that the value of this car will decline by 5% each year. Eventually this car will be sold for at least $6 000 and a new one will be purchased. How many years should this car be used before it can be sold? Select one: a. 4 b. 12 c. 6 d. 10 e. 8arrow_forwardQuestion 33rarrow_forward
- Kabir’s Ceramics spent 3000 Taka on a new kiln last year, in the belief that it would cut energy usage 25% over the old kiln. This kiln is an oven that turns “green ware” into finished pottery. Kabir is concerned that the new kiln requires extra labour hours for its operation. Kabir wants to check the energy savings of the new oven and also to look at other measures of their productivity to see if the change really was beneficial. Kabir has the following data to work with: Last Year This year Production (finished units) 4 000 No change Green ware(kgs) 5 000 5 000 Labour (hours) 350 300 Capital (MU) 15 000 3000 Taka more than last year Energy (kWh) 4 000 25 % less than last year 1.Analyse the productivity percentage change for Labour, Capital and Energy and justify the whether the investment decisions (you agree or not )arrow_forwardWhat is the difference between the functions of long-term operational assets and investments?arrow_forwardMacmillan Learning Investment - End of Chapter Problem In your first year of work you deposit $1,200 in your retirement account at an 8% interest rate. Calculate how much your investment is worth after each of the given time periods. Round your answers to the nearest dollar. 5 years: $ 20 years: $ 40 years: $ 1763 4320 Incorrect 8640 Incorrect 10 years: $ 30 years: $ 50 years: $ 2160 Incorrect 6480 Incorrect 10800 Incorrectarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning