Question

2-48 A refinisher of antiques named Constance has beern so successful with her small business that she is plan- ning to expand her shop. She is going to start enlarg ing her shop by purchasing the following equipment. A Cost of Power New Original Original Sizing Equipment Equipment Size Equipment Exponent Size Varnish bath 50 gal $3500 0.80 75 gal Power scraper 3/4 hp $250 0.22 1.5 hp Paint booth 3 ft3 $3000 0.6 12 ft3 What would be the net cost to Constance to obtain this equipment? Assume that she can trade the old equipment in for 15% of its original cost. Assume there has been no inflation in equipment prices.

Answer 1

Equipment	Cost of old equipment (C)	Original size (Q1)	New size(Q2)	Q=(Q2/Q1)	Power sizing exponent (n)	(Q)n	Cost of new equipment = C(Q)n
Varnish bath	3500	50 gal	75 gal	1.5	0.8	1.38	4830
Power scrapper	250	0.75 hp	1.5 hp	2	0.22	1.16	290
Paint booth	3000	3 ft3	12 ft3	4	0.6	2.3	6900

Total cost of new equipment = 4830+290+6900 = 12020$

Old equipment total cost = 6750$

Sale value of old equipment = 6750*15% = 1012.5$

Net cost to obtain new equipment = 12020-1012.5 = 11007.5$