1. An economic analysis is used to determine the profitability of a machine. Assume the minimum attractive rate of return (interest rate) is 3%. What is the present worth of this investment alternative?
Initial cost = $11,000
Estimated life = 7 years
Salvage value = 3,800
Annual maintenance cost = 475
Annual income = 1,800
Income gradient = 120
a.PW = $3,500
b.PW = $2,450
c.PW = $2,500
d.PW = $2,350
1. An economic analysis is used to determine the profitability of a machine. Assume the minimum...
Using Rate of Return Analysis, determine the most economical alternative below. Assume a minimum attractive rate of retum of 696, and a 6-year life with no salvage value for each. The alternatives are mutually exclusive. Initial cost Annual Cost Annual Benefit IRR.% $3000,000 10000 120,300 18 $100,000 25000 40800 $500,000 12000 9000 150200 55200 12 45
Using Rate of Return Analysis, determine the most economical alternative below. Assume a minimum attractive rate of retum of 696, and a 6-year life...
please solve both
Problem 5 A certain firm desires an economic analysis to determine which of the two machines is better. The minimum attractive rate of return for the firm is 15%. The following data are to be used in the analysis: Machine X Machine Y First Cost 110,000 210,000 Estimated Life 12 years 12 years Salvage Value $39,000 Annual Maintenance Cost|$4,500 $1,050 Problem 2 (Use the tables provided in the Economics section of the FE) How much should be...
Using Rate of Return Analysis, determine the most economical alternative below. Assume a minimum attractive rate of retum of 696, and a 6-year life with no salvage value for each. The alternatives are mutually exclusive. Initial cost Annual Cost Annual Benefit IRR.% $3000,000 10000 120,300 18 $100,000 25000 40800 $500,000 12000 9000 150200 55200 12 45
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...
office in Ontario is considering buying a 3-D printing machine. The office is choosing hetween two 3-D printing inachines that use Fused Deposition Modeling (FDM) technology. The office has a MARR (Minimum Acceptable Rate of Return) of 7%. The salvage value for both machines at the end of their service lives is expected to he $400. Use the information in the table below to answer the following questions Price Running cost per year Maintenance cost Machine A S6,400 $1,200 $600...
SITUATION: Two alternatives for a margarita mixer are under consideration. One system, the Mixer-Plus has an initial cost of $6,000. The salvage value after 7 years is expected to be $200. The operating costs including operator wages, routine maintenance, overhauls, etc., is expected to be $2,000 per year. It is expected that this machine will encourage the purchase of an additional 50 drinks per week costing $2.00 apiece to produce and for which $6.00 can be charged. Alternatively, a completely...
SITUATION: Two alternatives for a margarita mixer are under consideration. One system, the Mixer-Plus has an initial cost of $6,000. The salvage value after 7 years is expected to be $200. The operating costs including operator wages, routine maintenance, overhauls, etc., is expected to be $2,000 per year. It is expected that this machine will encourage the purchase of an additional 50 drinks per week costing $2.00 apiece to produce and for which $6.00 can be charged. Alternatively, a completely...
Question 1 10 pts Use Present Worth Analysis to determine whether Alternative A or B should be chosen. Items are identically replaced at the end of their useful lives. Assume an interest rate of 7% per year, compounded annually. Initial Cost Annual Benefit Alternative A 480 100 1100 Alternative B 1,310 260 |168 3 Salvage Value 116 Useful Life (yrs) O Alternative B, because it only incurs the initial cost once every three years instead of every two years O...
Use Present Worth Analysis to determine whether Alternative A or B should be chosen. Items are identically replaced at the end of their useful lives. Assume an interest rate of 3% per year, compounded annually. Alternative A 340 60 Alternative B 870 182 Initial Cost Annual Benefit Salvage Value Useful Life (yrs) 78 106 Alternative A, because it costs $65.43 less than Alternative B, in terms of present worth Alternative B, because it costs $65.43 more than Alternative A, in...
6. A Texas corporation is considering the following two alternatives: Before Tax Cash Flow (thousands) Year Alternative 1 Alternative 2 10,000 20,000 0 1- 10 4,500 4,500 11-20 0 4,500 Both alternatives will be depreciated with 7 year MACRS depreciation. As Texas has no state income tax requirement, the combined income tax rate for the company is 21%. Neither alternative is replaced at the end of its useful life. If the corporation has a minimum attractive rate of return of...