ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Chapter 13, Problem 46P
To determine
To assess: The best option.
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Evaluate to total present worth of all the cash-flow of machine ABC for an interest rate of 10% per year. Relevant costs are as follows
investment cost = $18,000
useful life = 20 years
Market value = $5000
Annual operating expenses =$250
Overhead cost end of the 7th year = $500
Overhead cost end of the 14th year = $800
The AW values for retaining a presently owned machine for additional years are shown in the table. Note that the values represent the
AW amount for each of the n years that the asset is kept, i.e., if it is kept 5 more years, the annual worth is $-95,000 for each of the 5
years. Assume that future costs remain as estimated for the replacement study and that used machines like the one presently owned
will always be available.
(a) What is the ESL and associated AW of the defender at a MARR of 12% per year?
(b) A challenger with an ESL of 7 years and an AWC = $-87,000 per year has been identified. Which AW will be less for the respective
ESL periods?
Retention Period, Years
AW Value, $ per Year
1
-80,000
-93,000
3.
-82,000
4
-92,000
-95,000
a) The ESL of the defender is
year(s) with the lowest AW of S
b) The defender
has the lower AW at S
for n equal to
The AW values for retaining a presently owned machine for additional years are shown in the table. Note that the values represent the AW amount for each of the n years that the asset is kept, i.e., if it is kept 5 more years, the annual worth is $−95,000 for each of the 5 years. Assume that future costs remain as estimated for the replacement study and that used machines like the one presently owned will always be available.
(a) What is the ESL and associated AW of the defender at a MARR of 12% per year?
(b) A challenger with an ESL of 7 years and an AWC = $-90,000 per year has been identified. Which AW will be less for the respective ESL periods?
Retention Period, Years
AW Value, $ per Year
1
-89,000
2
-95,000
3
-86,000
4
-85,000
5
-95,000
a) The ESL of the defender is ____year(s) with the lowest AW of $_____.
b) The (Click to select defender challenger) has the lower AW at $______for n equal to ____ .
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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