Homework Answers
Find the EUAC values for this asset as follows:
The formulas are:
The EUAC starts increasing from year 15. Therefore, the optimal replacement interval is 14 years.
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3. (20 points) Rohm and Hass uses an AGV in their warehouse. The AGV was purchased...
Question 8 Milliken uses a digitally controlled dyer for placing intricate patterns on manufactured carpet squares...
Question 8 Milliken uses a digitally controlled dyer for placing intricate patterns on manufactured carpet squares for home and commercial use. It is purchased for $400,000. Its market value will be $310,000 at the end of the 1st year and drop by $46,000 per year thereafter to a minimum of $30,000. Operating costs are $20,000 the 1st year, increasing by 8% per year. Maintenance costs are only $8,000 the 1st year but will increase by 35% each year thereafter. Milliken's...
please explain $250,000 is invested in equipment having a salvage value equal to $250,000(0.80”) after n...
please explain
$250,000 is invested in equipment having a salvage value equal to $250,000(0.80”) after n years of use. O&M costs equal $60,000 the first year and increase $8,000 per year. Based on a MARR of 10%, what are the optimum replacement interval and minimum EUAC?
(20 points) A landscaping service periodically purchases a new tractor. Costs for the tractor are expected...
(20 points) A landscaping service periodically purchases a new tractor. Costs for the tractor are expected to stay close to $30,000 for the next decade. 0&M expenses for tractors are typically $1,000 in the first year, increasing by $2,000 each year. (At the end of the 4th year, they would therefore be $7,000.) The company's MARR is 10%. The company uses MACRS GDS tables for depreciation of their tractors, and tractors are considered to have a 3-year property life. Given...
An equipment cost $80,000 initially. The market value has been declining at the rate of $15,000 y...
An equipment cost $80,000 initially. The market value has been declining at the rate of $15,000 yearly. The O & M (Operating & Maintenance) costs in year 1 were $10,000 and have been increasing by $2,000 from year 2. Determine the minimum cost life of this equipment for a MARR of 10%. (A) 2 years (B) 1 Year (C) 4 Years (D) 5 Years
A waste disposal company is considering the replacement of one of its aging trucks. The key...
A waste disposal company is considering the replacement of one of its aging trucks. The key parameters of the three trucks under scrutiny are provided below. Parameters Delta Epsilon Zeta 1. Initial Cost ($) 250,000 375,000 450,000 2. Revenues ($) 230,000 at EOY1 increasing by 2.5% annually thereafter 195,000 at EOY1 increasing by 3,000 annually thereafter 235,000 at EOY1 decreasing by 1% annually thereafter 3. Operating costs ($) 140,000 at EOY1 decreasing by 2,000 annually thereafter 125,000 at EOY1 decreasing...
A waste disposal company is considering the replacement of one of its aging trucks. The key...
A waste disposal company is considering the replacement of one of its aging trucks. The key parameters of the three trucks under scrutiny are provided below. Parameters Delta Epsilon Zeta 1. Initial Cost ($) 250,000 375,000 450,000 2. Revenues ($) 230,000 at EOY1 increasing by 2.5% annually thereafter 195,000 at EOY1 increasing by 3,000 annually thereafter 235,000 at EOY1 decreasing by 1% annually thereafter 3. Operating costs ($) 140,000 at EOY1 decreasing by 2,000 annually thereafter 125,000 at EOY1 decreasing...
A waste disposal company is considering the replacement of one of its aging trucks. The key...
A waste disposal company is considering the replacement of one of its aging trucks. The key parameters of the three trucks under scrutiny are provided below. Parameters Delta Epsilon Zeta 1. Initial Cost ($) 250,000 375,000 450,000 2. Revenues ($) 230,000 at EOY1 increasing by 2.5% annually thereafter 195,000 at EOY1 increasing by 3,000 annually thereafter 235,000 at EOY1 decreasing by 1% annually thereafter 3. Operating costs ($) 140,000 at EOY1 decreasing by 2,000 annually thereafter 125,000 at EOY1 decreasing...
1. Assume that your private university's tuition is $28,000 a) If inflation rate for the tuition ...
1. Assume that your private university's tuition is $28,000 a) If inflation rate for the tuition is 5% per year calculate what the tuition will cost 20 years from now? b) If general inflation rate for the economy is 3% per year, express that future tuition 20 years from now in real dollars, based on today's rate. 2. The local gas company has asked the planning department of your company to help them plan for future cash flows. They want...
Question 3 (10 marks) a) Six mutually exclusive projects A-F are being considered by a company....
Question 3 (10 marks) a) Six mutually exclusive projects A-F are being considered by a company. They have been ordered by first costs so that project A has the lowest first cost, and F the highest. The table below provides information on the IRR and incremental IRR of each investment. For example, the IRR of C is 11 % ; the incremental IRR going from A to C is 13 % and the incremental IRR from B to C is...
Over the next 3 years a road paving company is considering replacing their existing grading machine...
Over the next 3 years a road paving company is considering replacing their existing grading machine which was purchased 5 years ago for $950,000. Depreciation of the grading machine follows a straight line depreciation model with a predicted salvage value of $150,000 three years from now. The operation and maintenance costs of the grading machine have been increasing and are expected to be $20,000 next year, $30,000 two years from now and $50,000 three years from now. The company uses...
Question 8 Milliken uses a digitally controlled dyer for placing intricate patterns on manufactured carpet squares for home and commercial use. It is purchased for $400,000. Its market value will be $310,000 at the end of the 1st year and drop by $46,000 per year thereafter to a minimum of $30,000. Operating costs are $20,000 the 1st year, increasing by 8% per year. Maintenance costs are only $8,000 the 1st year but will increase by 35% each year thereafter. Milliken's...
please explain
$250,000 is invested in equipment having a salvage value equal to $250,000(0.80”) after n years of use. O&M costs equal $60,000 the first year and increase $8,000 per year. Based on a MARR of 10%, what are the optimum replacement interval and minimum EUAC?
(20 points) A landscaping service periodically purchases a new tractor. Costs for the tractor are expected to stay close to $30,000 for the next decade. 0&M expenses for tractors are typically $1,000 in the first year, increasing by $2,000 each year. (At the end of the 4th year, they would therefore be $7,000.) The company's MARR is 10%. The company uses MACRS GDS tables for depreciation of their tractors, and tractors are considered to have a 3-year property life. Given...
1. Assume that your private university's tuition is $28,000 a) If inflation rate for the tuition is 5% per year calculate what the tuition will cost 20 years from now? b) If general inflation rate for the economy is 3% per year, express that future tuition 20 years from now in real dollars, based on today's rate. 2. The local gas company has asked the planning department of your company to help them plan for future cash flows. They want...
Question 3 (10 marks) a) Six mutually exclusive projects A-F are being considered by a company. They have been ordered by first costs so that project A has the lowest first cost, and F the highest. The table below provides information on the IRR and incremental IRR of each investment. For example, the IRR of C is 11 % ; the incremental IRR going from A to C is 13 % and the incremental IRR from B to C is...
Over the next 3 years a road paving company is considering replacing their existing grading machine which was purchased 5 years ago for $950,000. Depreciation of the grading machine follows a straight line depreciation model with a predicted salvage value of $150,000 three years from now. The operation and maintenance costs of the grading machine have been increasing and are expected to be $20,000 next year, $30,000 two years from now and $50,000 three years from now. The company uses...
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