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- A firm is trying to decide which of two machines to purchase as described in in the table below. Using the interest rate 9% or 0.09, use present worth analysis to determine which machine, if either, should be purchased. Show all your work. Machine: A - B First Cost: $800 - $600 Annual Net Benefit: $130 - $230 Salvage Value: $40 - $20 Usefil Life (years): 9 - 3Еxample: Determine the probable cost per hour for owning and operating a truck with rubber tires after renting it for 6 month with an option to buy it later. Make use of the following information: Actual truck cost $50000 $10000 160 hp tires cost Engine Crankcase capacity Hours between oil changes Operating factor Useful life 60 liter 80 hr 50% б уears Operating hours per year Rental period Rental charges per month Tires useful life 2000 6 months $2500 5000 hr Maintenance for truck (60% of truck's Depreciation) Maintenance for tires (15% of tires' Depreciation) Investment (12% of Average Value) Cost of fuel per liter Cost of oil per liter 0.25 $/liter 1.50 $/literA firm is trying to decide between two types of trucks, one a conventional gasoline vehicle and the other a diesel powered. The following information is available. Gasoline $31,000 3 years $8,000 $0.41 Initial investment Useful life Salvage value Operating cost per mile a. With interest at 4% per year, determine the annual mileage at which the two trucks are equivalent. . For 17,000 miles per year in travel, which truck should be recommended? Click the icon to view the interest and annuity table for discrete compounding when /-4% per year. The annual mileage at which the two trucks are equivalent is miles. (Round to the nearest whole number) Diesel $23,000 2 years $5,000 $0.33
- A company is considering two alternatives with regards to equipment which it needs. The alternatives are as follows: Alternative A:PurchaseCost of Equipment 700,581Salvage Value 105,896Daily operating cost 534Economic life, years 10 Alternative B: Rental at 1,539 per day. At 18% interest, how many days per year must the equipment be in use if Alternative A is to be chosen.You have just bought a new pusher dozer for your equipmentfleet. Its cost is $100,000. It has an estimated servicelife of four years. Its salvage value is $12,000.a. Calculate the depreciation for the first and second yearusing the straight-line and DDB methods.b. The IIT components of ownership cost based on averageannual value are:Tax: 2%Insurance: 2%Interest: 7%What cost per hour of operation would you charge tocover IIT?A Company is considering two alternatives with regards to an equipment which it needs. The alternatives are as follows: Alternative A; Purchase Cost of equipment Salvage value Daily operating cost Economic life, years P700,000 100,000 500 10 Alternative B: Rental at P1,500 per day At 18% interest, how many days per year must the equipment be in use if Alternative A is to be chosen.
- 5. A car company rental is considering purchasing one type of compact car to replenish its fleet. Two- companies are offering this kind of car. Which option should a car company choose if their MARR. is 10% per year? Company A Company B Purchased Cost P 120,000 P 140,000 Maintenance Cost P 9,000 P 5,000 Salvage Value P 4,000 P 5,000 Life 3 years 3 yearsAn automotive company is planning the installation of inspection to reduce the cost of repairs for new and used automobiles under warranty. The economic life is 10 years with a rate of return of 25%, value of zero recovery. How much money should be invested based on a rate of return analysis. Plan Equipment Annual Hand Cost working Cost of auto repairs Actual A 1,400,000 40,000 B 1,700,000 50,000 C 1,800,000 60,000 D 2,000,000 70,000 AND 2,600,000 80,000 F 3,000,000 85,000 $ 1,585,000 680,000 610,000 300,000 230,000 180,000 165,000Two plans are available for a company to obtain automobiles for its salesmen. How many miles must the cars be driven each year for the two plans to have the same costs? Use an interest rate of 10%. Plan A: Lease the cars and pay PO.52 per mile. Plan B: Purchase the cars for P9.238 and economic life of three years after which it can be sold for P2,021, Gas and oil cost PO.07 per mile. Insurance is P500 per year.
- A firm is trying to decide between two types of trucks, one a conventional gasoline vehicle and the other a diesel powered. The following information is available Gasoline $28,000 Initial investment Useful life Salvage value Operating cost per mile a. With interest at 6% per year, determine the annual mileage at which the two trucks are equivalent b. For 15,000 miles per year in travel, which truck should be recommended? Click the icon to view the interest and annuity table for discrete compounding when/=6% per year 5 years $8,000 $0.47 a. The annual mileage at which the two trucks are equivalent is smiles (Round to the nearest whole number). Diesel $22,000 4 years $4,000 $0.39The "Fly By Night" Used Car Lot uses the following to illustrate their 11.8% finance plan on a car paid over 4 years. Cost of the car: $15000 11.8% finance charge: $7080 (that is, 11.8%/year x $15000 x 4 years) Total cost: $22080 $22080 Monthly payment: $460. 48 The first payment must be made one month after purchase. On the other hand, if you pay cash the dealer will offer you a discount of 5% of the cost of the car. What is the true interest rate compounded monthly being charged? Answer:Tommy's Toy Company is considering purchasing a new machine. The table below contains information on the two machines being considered. Use the IRR method to select which machine the company should purchase. The company has a MARR of 15 %. (to receive full credit briefly list the steps) Machine A Machine B Initial Cost Annual Revenue $ Salvage Value Time life, years $ 200,000 $ 700,000 95,000 $ 190,000 50,000 $ 150,000 12
