Please give an explanation to your answer.
Homework Answers
Answer (a)
The cash outflow on buying and operating the machine is
| Cash Outflow | |
| Year 1 | 22000 |
| Year 2 | 0 |
| Year 3 | 0 |
| Year 4 | 6500 |
| Year 5 | 6500 |
| Year 6 | 2500 |
| Year 7 | 3500 |
| Year 8 | 3500 |
| Year 9 | 3500 |
| Year 10 | 3500 |
The Equivalent Uniform Annual Cost is calculated as below
First calculate the Net Present Value (NPV) using the projected
cash flows
As a sample, we will illustrate the calculation for the entire 10
year period.
Discount Rate = 10%
NPV (10 year) = $34,681
Please note that since the EUAC will
To calculate the Equivalent Uniform Annual Cost, we use the PMT
formula in excel
Thus, EUAC (10 year) = $5,644
Using the above formulae, let us construct a table to determine
the lowest EUAC
| Cash Outflow | NPV | EUAC | |
| Year 0 | $22,000 | $22,000 | |
| Year 1 | $0 | $20,000 | |
| Year 2 | $0 | $18,182 | $10,476 |
| Year 3 | $0 | $16,529 | $6,647 |
| Year 4 | $6,500 | $24,036 | $7,583 |
| Year 5 | $6,500 | $27,705 | $7,309 |
| Year 6 | $2,500 | $28,988 | $6,656 |
| Year 7 | $3,500 | $30,621 | $6,290 |
| Year 8 | $3,500 | $32,105 | $6,018 |
| Year 9 | $3,500 | $33,454 | $5,809 |
| Year 10 | $3,500 | $34,681 | $5,644 |
Thus, the lowest EUAC is for the full 10 year period.
Answer (b)
If overhaul costs of $8,000 need to be paid at the end of year 5,
the table changes to
| Cash Outflow | NPV | EUAC | |
| Year 0 | $22,000 | $22,000 | |
| Year 1 | $0 | $20,000 | |
| Year 2 | $0 | $18,182 | $10,476 |
| Year 3 | $0 | $16,529 | $6,647 |
| Year 4 | $6,500 | $24,036 | $7,583 |
| Year 5 | $14,500 | $32,221 | $8,500 |
| Year 6 | $2,500 | $33,504 | $7,693 |
| Year 7 | $3,500 | $35,137 | $7,217 |
| Year 8 | $3,500 | $36,621 | $6,864 |
| Year 9 | $3,500 | $37,970 | $6,593 |
| Year 10 | $3,500 | $39,197 | $6,379 |
Add Answer to:
Please give an explanation to your answer.
A machine's initial maintenance costs are covered by a...
1. A new pipeline is installed. Annual maintenance and pumping costs are considered to be paid in...
1. A new pipeline is installed. Annual maintenance and pumping costs are considered to be paid in their entireties at the end of the years in which their costs are incurred (assume that maintenance happens in year 10). The pipe has the following costs and properties: Initial cost $7,500 Annual interest rate 5% Service life 10 years Salvage value $500 Annual maintenance $500 Pump cost/hour $2.75 Pump operation 2000 hours/year What is the equivalent uniform annual cost (EUAC) of the pipe?
EOY Multiple Choice: Circle the letter before the correct answer. 1. Find the economic life of an asset whose initial...
EOY Multiple Choice: Circle the letter before the correct answer. 1. Find the economic life of an asset whose initial capital investment is $10,000 and the project has the following cash flows: Market Value | Annual Expense 8000 3000 6500 3500 5000 4000 2500 4500 1000 5000 The MARR is 10%.
answer all questions please 15. A company is considering buying a computer with the following costs...
answer all questions please
15. A company is considering buying a computer with the following costs and interest rate. initial cost $3900 salvage value $1800 useful life 10 years annual maintenance $390 interest rate 69 Most nearly, what is the equivalent uniform annual cost (EUAC) of the computer? (A) $740 (B) $780 (C) $820 (D) $850 20. An engineer is evaluating two options for distribut- ing products from a production facility: renting or own ing trucks. The effective annual interest...
5) Mandy Manufacturing purchased a machine on August 1, 2014, and it was installed and ready...
5) Mandy Manufacturing purchased a machine on August 1, 2014, and it was installed and ready to run on January 1, 2015. The following costs were incurred in the purchase and installation of the machine. Invoice price $ 1,300,000 Freight costs 7.000 Purchase discount 2.500 Installation costs 66,000 Electrical and power connections 32,000 Repairs to correct damage incurred during uncrating 12.000 Adjustment costs 36,000 Spare parts for future use 25,000 Provincial sales tas 91.000 Fines incurred during the transport and...
Answer question 1,2,3 please 2. (Total 3.5 Points) Hindustan Motors is considering the purchase of one...
Answer question 1,2,3 please
2. (Total 3.5 Points) Hindustan Motors is considering the purchase of one of two machines required in its production process. Machine A has a life of two years. Machine A costs $50 initially and then $70 per year in maintenance. Machine B has an initial cost of $90. It requires $40 in maintenance for each year of its three-year life. Either machine must be replaced at the end of its life. The costs are expressed in...
Please solve, show work, and give detail explanation Exam #2 Review Problems Chapters 9 and 6...
Please solve, show work, and give detail explanation
Exam #2 Review Problems Chapters 9 and 6 10. If you dispose of an asset and its book value is greater than its salvage value, then you will have to pay taxes on the difference between the book value and salvage value. a. True b. False 11. Long-term bonds have more interest rate risk than do short-term bonds. a. True b. False 12. Bondholders demand an inflation premium to compensation them for...
Please help me solve 4-8 Use the following table to answer questions 1 – 6. The...
Please help me solve 4-8
Use the following table to answer questions 1 – 6. The wacc is 10% for all projects in this table. Year Project A -1,000 1,000 Project B -1,000 300 400 500 600 Project C -1,000 550 450 350 250 Project D -1,000 600 800 1. Compute the Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI), and Payback Period (PB) for each project: Project A Project B Project C Project D WACC...
Please don’t use Excel and answer all the parts of the questions. Make sure to show your work!! Problem 3 Machine...
Please don’t use Excel and answer all the parts of the questions.
Make sure to show your work!!
Problem 3 Machine Useful Life 20 yrs II 25 yrs Initial Cost Salvage Value Annual Operating Cost $80,000 $20,000 $18.000 $100,000 $25,000 $15,000 first 10 years 20,000 thereafter A company is considering buying a new piece of machinery. A 10 percent interest rate will be used in the computations. Two models of the machine are available. a. Determine which machine should be...
Maintenance Management, Please help with my assignment. Your task for this portfolio-type assignment is to write...
Maintenance Management,
Please help with my assignment.
Your task for this portfolio-type assignment is to write a technical report that demonstrates how you would co-ordinate and execute the entire project. Your report should highlight the following topics covered in the module: 1. Project Management: Use the WBS to plan for your project, indicating all equipment involved, maintenance activities, human resource and all costs (10) (20) 2. Networks for Projects: Prepare a network diagram for all activities in your project; 3....
Maintenance Management, Please help with my assignment. Your task for this portfolio-type assignment is to write...
Maintenance Management,
Please help with my assignment.
Your task for this portfolio-type assignment is to write a technical report that demonstrates how you would co-ordinate and execute the entire project. Your report should highlight the following topics covered in the module: 1. Project Management: Use the WBS to plan for your project, indicating all equipment involved, maintenance activities, human resource and all costs (10) (20) 2. Networks for Projects: Prepare a network diagram for all activities in your project; 3....
EOY Multiple Choice: Circle the letter before the correct answer. 1. Find the economic life of an asset whose initial capital investment is $10,000 and the project has the following cash flows: Market Value | Annual Expense 8000 3000 6500 3500 5000 4000 2500 4500 1000 5000 The MARR is 10%.
answer all questions please
15. A company is considering buying a computer with the following costs and interest rate. initial cost $3900 salvage value $1800 useful life 10 years annual maintenance $390 interest rate 69 Most nearly, what is the equivalent uniform annual cost (EUAC) of the computer? (A) $740 (B) $780 (C) $820 (D) $850 20. An engineer is evaluating two options for distribut- ing products from a production facility: renting or own ing trucks. The effective annual interest...
5) Mandy Manufacturing purchased a machine on August 1, 2014, and it was installed and ready to run on January 1, 2015. The following costs were incurred in the purchase and installation of the machine. Invoice price $ 1,300,000 Freight costs 7.000 Purchase discount 2.500 Installation costs 66,000 Electrical and power connections 32,000 Repairs to correct damage incurred during uncrating 12.000 Adjustment costs 36,000 Spare parts for future use 25,000 Provincial sales tas 91.000 Fines incurred during the transport and...
Answer question 1,2,3 please
2. (Total 3.5 Points) Hindustan Motors is considering the purchase of one of two machines required in its production process. Machine A has a life of two years. Machine A costs $50 initially and then $70 per year in maintenance. Machine B has an initial cost of $90. It requires $40 in maintenance for each year of its three-year life. Either machine must be replaced at the end of its life. The costs are expressed in...
Please solve, show work, and give detail explanation
Exam #2 Review Problems Chapters 9 and 6 10. If you dispose of an asset and its book value is greater than its salvage value, then you will have to pay taxes on the difference between the book value and salvage value. a. True b. False 11. Long-term bonds have more interest rate risk than do short-term bonds. a. True b. False 12. Bondholders demand an inflation premium to compensation them for...
Please help me solve 4-8
Use the following table to answer questions 1 – 6. The wacc is 10% for all projects in this table. Year Project A -1,000 1,000 Project B -1,000 300 400 500 600 Project C -1,000 550 450 350 250 Project D -1,000 600 800 1. Compute the Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI), and Payback Period (PB) for each project: Project A Project B Project C Project D WACC...
Please don’t use Excel and answer all the parts of the questions.
Make sure to show your work!!
Problem 3 Machine Useful Life 20 yrs II 25 yrs Initial Cost Salvage Value Annual Operating Cost $80,000 $20,000 $18.000 $100,000 $25,000 $15,000 first 10 years 20,000 thereafter A company is considering buying a new piece of machinery. A 10 percent interest rate will be used in the computations. Two models of the machine are available. a. Determine which machine should be...
Maintenance Management,
Please help with my assignment.
Your task for this portfolio-type assignment is to write a technical report that demonstrates how you would co-ordinate and execute the entire project. Your report should highlight the following topics covered in the module: 1. Project Management: Use the WBS to plan for your project, indicating all equipment involved, maintenance activities, human resource and all costs (10) (20) 2. Networks for Projects: Prepare a network diagram for all activities in your project; 3....
Maintenance Management,
Please help with my assignment.
Your task for this portfolio-type assignment is to write a technical report that demonstrates how you would co-ordinate and execute the entire project. Your report should highlight the following topics covered in the module: 1. Project Management: Use the WBS to plan for your project, indicating all equipment involved, maintenance activities, human resource and all costs (10) (20) 2. Networks for Projects: Prepare a network diagram for all activities in your project; 3....
Most questions answered within 3 hours.
-
MATLAB HW 11 problem using Switch Case and Input commands
Write a script file that calculates...
asked 3 minutes ago -
A college student is employed as a door-to-door newspaper
salesman. Historical data suggests that the student...
asked 18 minutes ago -
Considering gravitational time dilation, calculate the time that
passes in Earth’s surface while 1 hour passes...
asked 42 minutes ago -
Minitab Problem: Take the Lake Hume June rainfall data and find
use the processes outlined in...
asked 1 hour ago -
X Company is trying to decide whether to continue using old
equipment to make Product A...
asked 1 hour ago -
IN PYTHON ONLY !! Program 2: Re-work
program #5 (WeeklyHours) from the previous assignment such that...
asked 2 hours ago -
The average length of time between arrivals at a turnpike
toll-booth is 26 seconds. What is...
asked 3 hours ago -
(a) A piston at 6.1 atm contains a gas that occupies a volume of
3.5 L....
asked 5 hours ago -
Please answer true or false. Words
cannot be changed or added in to make it true...
asked 5 hours ago -
An empty test tube weighs 15.923 grams. Then,
MgCl2•6H2O is added into the test tube. After...
asked 5 hours ago -
Assume memory access is 10 units of time and disk access is
10000 units of time....
asked 5 hours ago -
1. Are all good samples random?
2. Magazines often report surveys giving statistics such as “63%...
asked 5 hours ago