The maintenance cost is incurred at the end of the year
Homework Answers
NPV of machine A = -39653.30
NPV of Machine B = -42426.02
Machine A is cheaper by $2772.72
| Machine A | ||||
| Year | Capital cost | O&M cost | Salvage | Net CF |
| 0 | -18000 | -18000 | ||
| 1 | -1200 | -1200 | ||
| 2 | -1200 | -1200 | ||
| 3 | -1200 | -1200 | ||
| 4 | -1200 | -1200 | ||
| 5 | -1200 | -1200 | ||
| 6 | -23000 | -1200 | 1500 | -22700 |
| 7 | -1200 | -1200 | ||
| 8 | -1200 | -1200 | ||
| 9 | -1200 | -1200 | ||
| 10 | -1200 | -1200 | ||
| 11 | -1200 | -1200 | ||
| 12 | -1200 | 1500 | 300 | |
| Effective rate | 0.08299951 | |||
| NPV | ($39,653.30) | |||
| Machine B | ||||
| Year | Capital cost | O&M cost | Salvage | Net CF |
| 0 | -38000 | -38000 | ||
| 1 | -700 | -700 | ||
| 2 | -700 | -700 | ||
| 3 | -700 | -700 | ||
| 4 | -700 | -700 | ||
| 5 | -700 | -700 | ||
| 6 | -700 | -700 | ||
| 7 | -700 | -700 | ||
| 8 | -700 | -700 | ||
| 9 | -700 | -700 | ||
| 10 | -700 | -700 | ||
| 11 | -700 | -700 | ||
| 12 | -700 | 2000 | 1300 | |
| NPV | ($42,426.02) | |||
Workings
Add Answer to:
The maintenance cost is incurred at the end of the year
Two machines are being considered...
ENGR 1110 Comparing Economic Alternatives Two machines are being considered for the same task. Machine A costs $18,...
ENGR 1110 Comparing Economic Alternatives Two machines are being considered for the same task. Machine A costs $18,000 new and is estimated to last 6 years. The cost to replace machine A after 6 years will be $23,000. Machine A will cost $1,200 per year to operate/maintain and it will have a trade-in (salvage) value of $1,500. Machine B costs $38,000 to buy, will last 12 years and will have a trade in value of $2,000. The cost of operation...
compare after 12 years ENGR 1110 Comparing Economic Alternatives Two machines are being considered for the...
compare after 12 years
ENGR 1110 Comparing Economic Alternatives Two machines are being considered for the same task. Machine A costs $18,000 new and is estimated to last 6 years. The cost to replace machine A after 6 years will be $23,000. Machine A will cost $1,200 per year to operate/maintain and it will have a trade-in (salvage) value of $1,500. Machine B costs $38,000 to buy, will last 12 years and will have a trade in value of $2,000....
compare after 12 years ENGR 1110 Comparing Economic Alternatives Two machines are being considered for the same task...
compare after 12 years
ENGR 1110 Comparing Economic Alternatives Two machines are being considered for the same task. Machine A costs $18,000 new and is estimated to last 6 years. The cost to replace machine A after 6 years will be $23,000. Machine A will cost $1,200 per year to operate/maintain and it will have a trade-in (salvage) value of $1,500. Machine B costs $38,000 to buy, will last 12 years and will have a trade in value of $2,000....
Please compare after 12 years and include cash flow diagram for A and B. Two machines...
Please compare after 12 years and include cash flow diagram
for A and B.
Two machines are being considered for the same task. Machine A costs $18,000 new and is estimated to last 6 years. The cost to replace machine A after 6 years will be $23,000. Machine A will cost $1,200 per year to operate/maintain and it will have a trade-in (salvage) value of $1,500. Machine B costs $38,000 to buy, will last 12 years and will have a...
0 Homework Xinhong Company is considering replacing one of its manufacturing machines. The machine has a...
0 Homework Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $38,000 and a remaining useful life of four years, at which time Its salvage value will be zero. It has a current market value of $48,000. Variable manufacturing costs are $33,900 per year for this machine. Information on two alternative replacement machines follows. Cost Alternative $ 124,000 23,000 Variable manufacturing costs per year 111,000 19,800 Calculate the total change in net...
(1 point) The capitalized cost of an assset is the sum of the original cost of the asset and the present value of maintaining the asset. Suppose a company is considering the purchase of two different...
(1 point) The capitalized cost of an assset is the sum of the original cost of the asset and the present value of maintaining the asset. Suppose a company is considering the purchase of two different machines. Machine 1 costs $15000 and t years from now will cost M() = 5000(1 + 0.030 dollars to maintain. Machine 2 costs only $14000, but its maintenance cost at time t is M2(t) = 5100 dollars If the cost of money is 5%...
PROBLEM The following costs are associated with three tomato-peeling machines being considered fo...
CALCULATE FOR B
PROBLEM The following costs are associated with three tomato-peeling machines being considered for use in a food canning plan Machine A S52,000 15,000 Machine B $67,000 12,000 Machine C $63,000 9,000 First cost Annual Maintenance & Operating costs Annual increase starting in year2 Annual benefit Salvage value Useful life, in years 38,000 13,000 4 37,000 22,000 12 250 31,000 19,000 If the canning company uses a MARR of 12%, which is the best alternative? Show your analysis...
Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses. It is...
Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $150,000. This machine will require $24.000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $265,000. This machine will require $18,000 per year in ongoing maintenance expenses and will lower bottling costs by $10.000 per year. Also, $38,000...
(1 point) The capitalized cost of an assset is the sum of the original cost of the asset and the present value of maint...
(1 point) The capitalized cost of an assset is the sum of the original cost of the asset and the present value of maintaining the asset. Suppose a company is considering the purchase of two different machines. Machine 1 costs $25000 and years from now will cost MI() = 2000(1 + 0.06) dollars to maintain. Machine 2 costs only $15000, but its maintenance cost at time t is M2() = 2500 dollars. If the cost of money is 5% per...
1 point) The capitalized cost of an assset is the sum of the original cost of the asset and the present value of mainta...
1 point) The capitalized cost of an assset is the sum of the original cost of the asset and the present value of maintaining the asset. Suppose a company is considering the purchase of two different machines. Machine 1 costs $10000 and t years from now will cost Mi()-3000(1 + 0.07) dollars to maintain. Machine 2 costs only $6000, but its maintenance cost at time t is M2(t) 3200 dollars. If the cost of money is 8% per year compounded...
ENGR 1110 Comparing Economic Alternatives Two machines are being considered for the same task. Machine A costs $18,000 new and is estimated to last 6 years. The cost to replace machine A after 6 years will be $23,000. Machine A will cost $1,200 per year to operate/maintain and it will have a trade-in (salvage) value of $1,500. Machine B costs $38,000 to buy, will last 12 years and will have a trade in value of $2,000. The cost of operation...
compare after 12 years
ENGR 1110 Comparing Economic Alternatives Two machines are being considered for the same task. Machine A costs $18,000 new and is estimated to last 6 years. The cost to replace machine A after 6 years will be $23,000. Machine A will cost $1,200 per year to operate/maintain and it will have a trade-in (salvage) value of $1,500. Machine B costs $38,000 to buy, will last 12 years and will have a trade in value of $2,000....
compare after 12 years
ENGR 1110 Comparing Economic Alternatives Two machines are being considered for the same task. Machine A costs $18,000 new and is estimated to last 6 years. The cost to replace machine A after 6 years will be $23,000. Machine A will cost $1,200 per year to operate/maintain and it will have a trade-in (salvage) value of $1,500. Machine B costs $38,000 to buy, will last 12 years and will have a trade in value of $2,000....
Please compare after 12 years and include cash flow diagram
for A and B.
Two machines are being considered for the same task. Machine A costs $18,000 new and is estimated to last 6 years. The cost to replace machine A after 6 years will be $23,000. Machine A will cost $1,200 per year to operate/maintain and it will have a trade-in (salvage) value of $1,500. Machine B costs $38,000 to buy, will last 12 years and will have a...
0 Homework Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $38,000 and a remaining useful life of four years, at which time Its salvage value will be zero. It has a current market value of $48,000. Variable manufacturing costs are $33,900 per year for this machine. Information on two alternative replacement machines follows. Cost Alternative $ 124,000 23,000 Variable manufacturing costs per year 111,000 19,800 Calculate the total change in net...
(1 point) The capitalized cost of an assset is the sum of the original cost of the asset and the present value of maintaining the asset. Suppose a company is considering the purchase of two different machines. Machine 1 costs $15000 and t years from now will cost M() = 5000(1 + 0.030 dollars to maintain. Machine 2 costs only $14000, but its maintenance cost at time t is M2(t) = 5100 dollars If the cost of money is 5%...
CALCULATE FOR B
PROBLEM The following costs are associated with three tomato-peeling machines being considered for use in a food canning plan Machine A S52,000 15,000 Machine B $67,000 12,000 Machine C $63,000 9,000 First cost Annual Maintenance & Operating costs Annual increase starting in year2 Annual benefit Salvage value Useful life, in years 38,000 13,000 4 37,000 22,000 12 250 31,000 19,000 If the canning company uses a MARR of 12%, which is the best alternative? Show your analysis...
Beryl's Iced Tea currently rents a bottling machine for $50,000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $150,000. This machine will require $24.000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $265,000. This machine will require $18,000 per year in ongoing maintenance expenses and will lower bottling costs by $10.000 per year. Also, $38,000...
(1 point) The capitalized cost of an assset is the sum of the original cost of the asset and the present value of maintaining the asset. Suppose a company is considering the purchase of two different machines. Machine 1 costs $25000 and years from now will cost MI() = 2000(1 + 0.06) dollars to maintain. Machine 2 costs only $15000, but its maintenance cost at time t is M2() = 2500 dollars. If the cost of money is 5% per...
1 point) The capitalized cost of an assset is the sum of the original cost of the asset and the present value of maintaining the asset. Suppose a company is considering the purchase of two different machines. Machine 1 costs $10000 and t years from now will cost Mi()-3000(1 + 0.07) dollars to maintain. Machine 2 costs only $6000, but its maintenance cost at time t is M2(t) 3200 dollars. If the cost of money is 8% per year compounded...
Most questions answered within 3 hours.
-
On January 1, 2017, Nicks Corporation issued $250 million of
floating-rate debt. The debt carries a...
asked 24 minutes ago -
If Mark is unable to see objects clearly when they are placed
beyond 0.5m away, (a)...
asked 21 minutes ago -
Where there is no course of performance, usage of trade, or
course of dealing, and where...
asked 22 minutes ago -
A piece of charcoal (essentially 100% carbon) from an
archaeological site in Egypt is subjected to...
asked 38 minutes ago -
7) A) Balance the following reaction:
__H2SO4 + __NaOH __Na2SO4 + __H2O
b) Classify the...
asked 40 minutes ago -
Planets X, Y, and Z have circular orbits around a Star, which is
similar to our...
asked 49 minutes ago -
Use case analysis is used to ____
a) communicate system requirements
b) implement the system
c)...
asked 47 minutes ago -
What is the equilibrium constant for the reaction below, given
the listed concentrations at equilibrium? Report...
asked 50 minutes ago -
The following account appears in the ledger prior to recognizing
the jobs completed in August:
Work...
asked 51 minutes ago -
Air contained in a piston-cylinder undergoes two processes in
series. In the first the air expands...
asked 56 minutes ago -
Propose a circuit that has an effective resistance of 6666ohms.
Include drawing.
asked 1 hour ago -
Starting with a given fatty acid: C22:6 w-3 go through the
process of beta oxidation. begin...
asked 1 hour ago