ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question
Chapter 13, Problem 43P
To determine
Whether all the old machines should be replaced with 6 new machines or three additional new machines should be bought keeping old machines intact on the basis of net cash flow analysis.
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Because it fumes at room temperatures, hydrochloric acid creates a very corrosive work environment. A machine working in that
environment is deteriorating quickly and can be used for only one more year, at which time it will be scrapped with no salvage value. It
was purchased 3 years ago for $88.000, and its operating cost for the next year is expected to be $57,000. A more corrosion-resistant
challenger will cost $212,000 with an operating cost of $55.000 per year. It is expected to have a $50.000 salvage value after its 10-
year ESL At an interest rate of 11% per year, what minimum replacement value would render the challenger attractive?
The minimum replacement value that would render the challenger attractive is $[
A machine that cost $120,000 3 years ago can be sold now for $51,500. Its market value is expected to be $40,000 and $20,000 1
year and 2 years from now, respectively. Its operating cost was $18,000 for the first 3 years of its life, but the M&O cost is expected to
be $23,000 for the next 2 years. A new improved machine that can be purchased for $135,500 will have an economic life of 5 years,
and an operating cost of $9,000 per year, and a salvage value of $32,000 whenever it is replaced. At an interest rate of 10% per year,
determine if the presently owned machine should be replaced now, 1 year from now, or 2 years from now.
The annual worth of the existing machine one year from now is $- 50500 O. the annual worth of the existing machine two years
from now is $- 30,500 . and the annual worth of the new machine is $-112,500
The presently owned machine should be replaced now
13
Machine A was purchased 5 years ago for $90,000. Its operating cost is higher than expected, so it will be used for only 4 more years. Its operating cost this year will be $40,000, increasing by $2000 per year through the end of its useful life. The challenger, machine B, will cost $150,000 with a $50,000 salvage value after its 10-year ESL. Its operating cost is expected to be$10,000 for year 1, increasing by $500 per year thereafter. What is the market value for machine A that would make the two machines equally attractiveat an interest rate of 12% per year?
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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