Using incremental rate of return, determine which of the following options is the most cost effective...
Using incremental rate of return, determine which of the
following options is the most cost effective provided a minimum
annual rate of return (MARR) of 18%, a useful life of 10 years, and
the following data:
Option 1:
Initial Cost: $50,000
Annual Cost: $7,000/ year with an annual increase of $500 each
year
Repair Cost at year 8: $20,000
Salvage Value: $35,000
Option 2:
Initial Cost: $35,000
Annual Cost: $9,000/ year with an annual increase of $1,000 each
year
Repair Cost at year 6: $12,000
Salvage Value: $15,000
Homework Answers
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Using incremental rate of return, determine which of the
following options is the most cost effective...
Determine whether either of the alternatives below should be selected. Use an MARR of 15% per...
Determine whether either of the alternatives below should be
selected. Use an MARR of 15% per year. Incremental Rate of Return
Analysis must be used. (PLEASE DO NOT USE EXCEL).
First Cost Annual Operating Cost Annual Repair Cost Annual Increase in Repair Cost Salvage Value Life (years) Project A -$60,000 -$15,000 -$5,000 -$1,000 $8,000 15 Project B -$90,000 -$8,000 -$2,000 -$1,500 $12,000 15
1. Given the costs and benefits of two water pumps, what is the rate of return on the difference ...
1. Given the costs and benefits of two water pumps, what is the rate of return on the difference of these alternatives? Year -$3000 +800 +800 +800 +800 +800 -$3800 +1200 +1200 +1200 +1200 +1200 What is your choice of these 2 alternatives and why? 2. The manager of a local restaurant is trying to decide whether to buy a charcoal broiling unit or an electric grill for cooking hamburgers. A market study shows customers prefer charcoal broiling but the...
Using Rate of Return Analysis, determine the most economical alternative below. Assume a 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...
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...
Using Rate of Return Analysis, determine the most economical alternative below. Assume a minimum attractive rate...
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
5. An environmen tal engineer must recommend one of two methods for monitoring high colony counts...
explain steps and notation. dont do on excel. i rate
5. An environmen tal engineer must recommend one of two methods for monitoring high colony counts of E.coli and other bacteria in watershed area "hot spots". What's the incremental of return (2 decimal places)? which method is more economically justified at 12% MARR. (20 pts, due 4/11, 11:59pm) rate Method B Method A 310,000 -100,000 Initial Cost, S Annual operating cost, S per year -55,000 in year 1, -50,000 in...
Compute net present value, profitability C index, and internal rate of return. P12.3A (LO 2, 3,...
Compute net present value, profitability C index, and internal rate of return. P12.3A (LO 2, 3, 4), AN Service Brooks Clinic is considering investing in new heart-monitoring equipment. It has two options. Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 4 years. Option B would require no rebuilding expenditure, but its main- tenance costs would be higher. Since the Option B machine is of initial higher quality, it is expected to...
The problem below must be solved using rate of return analysis. Type B equipment has an installed...
The problem below must be solved using rate of return analysis. Type B equipment has an installed cost of $9,000, a uniform annual benefit of $1,600, a salvage value of $3000, and a useful life of 6 years. Type A equipment has an installed cost of $10,000, a uniform annual benefit of $1,700, a salvage value of $3800, and a useful life of 6 years. If the MARR is 7%, which type of equipment should be selected, A or B?...
Exercise 12-6 Simple Rate of Return Method [LO12-6] The management of Ballard MicroBrew is considering the...
Exercise 12-6 Simple Rate of Return Method [LO12-6] The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $59,000. The machine would replace an old piece of equipment that costs $15,000 per year to operate. The new machine would cost $7,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $25,000. The new machine would have a useful life of 10 years with no salvage...
Exercise 13-6 Simple Rate of Return Method (LO13-6) The management of Ballard MicroBrew is considering the...
Exercise 13-6 Simple Rate of Return Method (LO13-6) The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $57,000. The machine would replace an old piece of equipment that costs $15,000 per year to operate. The new machine would cost $7,000 per year to operate. The old machine currently in use is fully depreciated and could be sold now for a salvage value of $24,000. The new machine would have a useful life of 10...
Determine whether either of the alternatives below should be
selected. Use an MARR of 15% per year. Incremental Rate of Return
Analysis must be used. (PLEASE DO NOT USE EXCEL).
First Cost Annual Operating Cost Annual Repair Cost Annual Increase in Repair Cost Salvage Value Life (years) Project A -$60,000 -$15,000 -$5,000 -$1,000 $8,000 15 Project B -$90,000 -$8,000 -$2,000 -$1,500 $12,000 15
1. Given the costs and benefits of two water pumps, what is the rate of return on the difference of these alternatives? Year -$3000 +800 +800 +800 +800 +800 -$3800 +1200 +1200 +1200 +1200 +1200 What is your choice of these 2 alternatives and why? 2. The manager of a local restaurant is trying to decide whether to buy a charcoal broiling unit or an electric grill for cooking hamburgers. A market study shows customers prefer charcoal broiling but the...
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...
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...
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
explain steps and notation. dont do on excel. i rate
5. An environmen tal engineer must recommend one of two methods for monitoring high colony counts of E.coli and other bacteria in watershed area "hot spots". What's the incremental of return (2 decimal places)? which method is more economically justified at 12% MARR. (20 pts, due 4/11, 11:59pm) rate Method B Method A 310,000 -100,000 Initial Cost, S Annual operating cost, S per year -55,000 in year 1, -50,000 in...
Compute net present value, profitability C index, and internal rate of return. P12.3A (LO 2, 3, 4), AN Service Brooks Clinic is considering investing in new heart-monitoring equipment. It has two options. Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 4 years. Option B would require no rebuilding expenditure, but its main- tenance costs would be higher. Since the Option B machine is of initial higher quality, it is expected to...
Exercise 12-6 Simple Rate of Return Method [LO12-6] The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $59,000. The machine would replace an old piece of equipment that costs $15,000 per year to operate. The new machine would cost $7,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $25,000. The new machine would have a useful life of 10 years with no salvage...
Exercise 13-6 Simple Rate of Return Method (LO13-6) The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $57,000. The machine would replace an old piece of equipment that costs $15,000 per year to operate. The new machine would cost $7,000 per year to operate. The old machine currently in use is fully depreciated and could be sold now for a salvage value of $24,000. The new machine would have a useful life of 10...
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