Homework Answers
NPW of A = -5000 + 1000 * (P/A, 5%,7) + 990 * (P/F, 5%,7)
= -5000 + 1000 * 5.786373 + 990 * 0.710681
= 1489.94
NPW of B = -3000 + 700 * (P/A, 5%,7) + 300 * (P/G, 5%,7) + 450 * (P/F, 5%,7)
= -3000 + 700 * 5.786373 + 300 * 16.232082 + 450 * 0.710681
= 6239.89
As NPW of B is higher, it should be selected
Add Answer to:
Consider the two devices below with a useful lifetime of 7
years. Which device should we...
Your company is trying to decide which of the two following devices should be selected. Device...
Your company is trying to decide which of the two following devices should be selected. Device A: costs $1,000 but can save $300 annually Device B: costs $1,350 but can save $300 the first year, but savings is increased $50 annually thereafter. Both devices have 5-year useful life and no salvage value a) Draw cash flow diagram for each option b) If interest rate is 7%, which device should your company purchase?
Johnson Farms is planning to install one of two mechanical devices to reduce costs. Both cost...
Johnson Farms is planning to install one of two mechanical devices to reduce costs. Both cost $1000 and last five years with no salvage value. Device A can be expected to result in $300 savings annually. Device B will provide cost saving of $400 the first year but will decline by $50 annually, making the second year saving to $350 and third year savings $300 and so forth, with interest at 7% per year, calculate PW of each device. Which...
Example (3): We have three alternatives highway improvements to consider. In which should we choose to...
Example (3): We have three alternatives highway improvements to consider. In which should we choose to invest? All will last for 50 years. Assume an interest rate of 3%. Saving Const. Accidents Trav. Time Operating $185,000 $5,000 $3,000 $500 - 2 $220,000 $5,000 $6,500 $500 3 $310,000 $7,000 $6,000 $2,800 Given i=3%, n=50 Find alternative in which to invest using (NPV). $1,500 $2,500 $3,000
Example (3): We have three alternatives highway improvements to consider. In which should we choose to...
Example (3): We have three alternatives highway improvements to consider. In which should we choose to invest? All will last for 50 years. Assume an interest rate of 3%. Saving Const. Accidents Trav. Time Operating $185,000 $5,000 $3,000 $500 2 $220,000 $5,000 $6,500 $500 3 $310,000 $7,000 $6,000 $2,800 Given i=3%, n=50 Find alternative in which to invest using (NPV). $1,500 $2,500 $3,000
Question 7 (15 points) Consider 2 alternatives with the following cash flows below at interest rate...
Question 7 (15 points) Consider 2 alternatives with the following cash flows below at interest rate of 10%. Which is the more desirable alternative? A B Investment Cost $100,000 $120,000 Year 1: $1,000 Year 1: $1,500 Yearly Costs Year 2: $1,000+ $400 Year 2: $1,500+ $300 (From Year 1 to Year 3: $1,000 + 2 x $400 Year 3: S1,500 + 2 x $300 End of Useful Life)... Year 15: $1,000 + 14 x $400 Year 30: $1,500 + 29...
Two pieces of equipment are being considered for purchase. If interest is 15%. which piece of...
Two pieces of equipment are being considered for purchase. If interest is 15%. which piece of equipment should be purchased? Use Annual Cash Flow Analysis to solve: 4. A $8,000 $2,000 $1,200 12 yr. B PW Cost EUAB $5,000 $1,000 $ 700 Salvage Value Useful Life 3 yr. EUAW A EUAWB ATION Best Alter
Two pieces of equipment are being considered for purchase. If interest is 15%. which piece of equipment should be purchased? Use Annual Cash Flow Analysis to...
(C) FUPRE Energy Enterprise Ltd is considering which of two mechanical devices to install to reduce...
(C) FUPRE Energy Enterprise Ltd is considering which of two mechanical devices to install to reduce costs in a particular situation. Both devices cost N20,000 and have useful lives of 5 years and no salvage value, Device A can be expected to result in N3000 savings annually. Device B will provide cost savings of N4000 in the first year but will decline at N500 annually, making the second-year savings N3500, the third-year savings N3000, and so forth. As a consulting...
7. A company invests AED 110,000 in a project with a lifetime of 35 years. The...
7. A company invests AED 110,000 in a project with a lifetime of 35 years. The project gives an annual income of AED 12,000. The yearly maintenance costs are AED 3,500 and the salvage value for the project after 35 years is AED 20,500. There is a single extra cost at the end of ten years of AED 20,800 for renovation of the project. Calculate the Internal Rate of Return for the project. Use interest rate values of 5 and...
The Zed Company is considering the purchase of a new machine. The new machine will have zero salvage value and a useful...
The Zed Company is considering the purchase of a new machine. The new machine will have zero salvage value and a useful life of 7 years. The company uses a MARR of 3%. Zed has bids from 3 manufacturers. The information for each machine is in the table below: Machine AMachine BMachine C $2,000$3,000$8,000 Initial Cost $700$3,000 Efficiency Savings per Year $700 $400 $700 $300 Annual Maintenance Costs 1. What is the B/C Ratio for machine A: 2. What is...
1) Consider these two machines (alternatives): (12 Points) B A $5000 $1750 $700 $8200 $1850 $500...
1) Consider these two machines (alternatives): (12 Points) B A $5000 $1750 $700 $8200 $1850 $500 First Cost Uniform annual benefit Salvage Value Useful Life, in Years 4 If the MARR (minimum attractive rate of return) -7 % , which alternative should be selected? Use the Present worth Analysis method.
1) Consider these two machines (alternatives): (12 Points) B A $5000 $1750 $700 $8200 $1850 $500 First Cost Uniform annual benefit Salvage Value Useful Life, in Years 4 If the...
Johnson Farms is planning to install one of two mechanical devices to reduce costs. Both cost $1000 and last five years with no salvage value. Device A can be expected to result in $300 savings annually. Device B will provide cost saving of $400 the first year but will decline by $50 annually, making the second year saving to $350 and third year savings $300 and so forth, with interest at 7% per year, calculate PW of each device. Which...
Example (3): We have three alternatives highway improvements to consider. In which should we choose to invest? All will last for 50 years. Assume an interest rate of 3%. Saving Const. Accidents Trav. Time Operating $185,000 $5,000 $3,000 $500 - 2 $220,000 $5,000 $6,500 $500 3 $310,000 $7,000 $6,000 $2,800 Given i=3%, n=50 Find alternative in which to invest using (NPV). $1,500 $2,500 $3,000
Example (3): We have three alternatives highway improvements to consider. In which should we choose to invest? All will last for 50 years. Assume an interest rate of 3%. Saving Const. Accidents Trav. Time Operating $185,000 $5,000 $3,000 $500 2 $220,000 $5,000 $6,500 $500 3 $310,000 $7,000 $6,000 $2,800 Given i=3%, n=50 Find alternative in which to invest using (NPV). $1,500 $2,500 $3,000
Question 7 (15 points) Consider 2 alternatives with the following cash flows below at interest rate of 10%. Which is the more desirable alternative? A B Investment Cost $100,000 $120,000 Year 1: $1,000 Year 1: $1,500 Yearly Costs Year 2: $1,000+ $400 Year 2: $1,500+ $300 (From Year 1 to Year 3: $1,000 + 2 x $400 Year 3: S1,500 + 2 x $300 End of Useful Life)... Year 15: $1,000 + 14 x $400 Year 30: $1,500 + 29...
Two pieces of equipment are being considered for purchase. If interest is 15%. which piece of equipment should be purchased? Use Annual Cash Flow Analysis to solve: 4. A $8,000 $2,000 $1,200 12 yr. B PW Cost EUAB $5,000 $1,000 $ 700 Salvage Value Useful Life 3 yr. EUAW A EUAWB ATION Best Alter
Two pieces of equipment are being considered for purchase. If interest is 15%. which piece of equipment should be purchased? Use Annual Cash Flow Analysis to...
(C) FUPRE Energy Enterprise Ltd is considering which of two mechanical devices to install to reduce costs in a particular situation. Both devices cost N20,000 and have useful lives of 5 years and no salvage value, Device A can be expected to result in N3000 savings annually. Device B will provide cost savings of N4000 in the first year but will decline at N500 annually, making the second-year savings N3500, the third-year savings N3000, and so forth. As a consulting...
7. A company invests AED 110,000 in a project with a lifetime of 35 years. The project gives an annual income of AED 12,000. The yearly maintenance costs are AED 3,500 and the salvage value for the project after 35 years is AED 20,500. There is a single extra cost at the end of ten years of AED 20,800 for renovation of the project. Calculate the Internal Rate of Return for the project. Use interest rate values of 5 and...
The Zed Company is considering the purchase of a new machine. The new machine will have zero salvage value and a useful life of 7 years. The company uses a MARR of 3%. Zed has bids from 3 manufacturers. The information for each machine is in the table below: Machine AMachine BMachine C $2,000$3,000$8,000 Initial Cost $700$3,000 Efficiency Savings per Year $700 $400 $700 $300 Annual Maintenance Costs 1. What is the B/C Ratio for machine A: 2. What is...
1) Consider these two machines (alternatives): (12 Points) B A $5000 $1750 $700 $8200 $1850 $500 First Cost Uniform annual benefit Salvage Value Useful Life, in Years 4 If the MARR (minimum attractive rate of return) -7 % , which alternative should be selected? Use the Present worth Analysis method.
1) Consider these two machines (alternatives): (12 Points) B A $5000 $1750 $700 $8200 $1850 $500 First Cost Uniform annual benefit Salvage Value Useful Life, in Years 4 If the...
Most questions answered within 3 hours.
-
When two wires of identical dimensions are used to hang 25.0 kg
weights, wire A is...
asked 20 seconds from now -
Implement a program (in both C# and Python) which includes a
user-defined exception giving a message...
asked 3 minutes ago -
If an ocean wave passes a stationary point every 4 s and has a
velocity of...
asked 11 minutes ago -
A train consists of a 4300-kg locomotive pulling two loaded
boxcars. The first boxcar has a...
asked 17 minutes ago -
The four 1.04g spheres shown below have q+ve = 12.0nC
and d=2.81cm. The spheres are released...
asked 18 minutes ago -
Give the identity of the unknown group 1 metal/chloride salt with
molar mass 285.75 g/mol
asked 22 minutes ago -
how
to balance this equation?
MnO2
+ PbO2
+ HNO3
→ HMnO4
+ Pb(NO3)2
+ H2O...
asked 29 minutes ago -
Most of the Central Banks including the Bank of Canada
cutting their benchmark interest rates, please...
asked 32 minutes ago -
A force of at least 1900N (Newtons) is required to initially
push a large object from...
asked 45 minutes ago -
Max Welte has converted an industrial bond to cash and is now
considering other investment opportunities...
asked 49 minutes ago -
A plated distillation column is designed to produce 8000 kg h-1
distillate and 15000 kg h-1...
asked 45 minutes ago -
please write your own word, don't copy type and answer all of
them then I will...
asked 48 minutes ago