Question 2 Part A:A new project is being considered. The initial cost of the project is $100,000. It is expected that revenues will be $23,000 annually. There will be annual operating expenses of $10,000.At the end of the 8-year life of the project, there is a salvage value of $20,000. Use a MARR of 5%. Perform a PW (present worth) analysis.Question 2 Part A: Choose the correct Cash Flow Diagram for this scenario from the following choices.Option A23,000100,000110,000Option B23,000081i=5%20,000Option C23,00001100,00010,000i = 5%100,00020,000Option D810100,00010,0008i=5%20,00023,00010,000i = 5%20,0008

A Cash Flow Diagram (CFD) is a graphical representation of cash inflows and outflows over a certain…

Answered: Question 2 Part A: A new project is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Walt Wallace Construction is investigating the purchase of a new dump truck with a 10 year useful life. Annual interest is 9%.The cash flows for two models are: Model Purchase price Annual Operating Cost Annual Income Salvage Value A $50,000 $2,000 $9,000 $10,000 B $80,000 $1,000 $12,000 $30,000 Using the EUAB analysis, which truck should be purchased and why? (Show your EUAB numbers for each option and explain the better choice.)
Problem 3 A piece of equipment is estimated to cost $86,000 new and to have a useful life of 5 years with a salvage value of $14,000. The company believes that a realistic MARR would be 10%. Taxes, insurance, and storage should amount to an additional 8%, which results in an overall cost of money of 10 + 8, or 18%. To recover ownership cost, what is the appropriate amount per hour that must be charged for the equipment usage if the expected use rate of the equipment is 1,200 hours per year?
A potential project is currently under review. An initial investment of $87,000 would be necessary for equipment. The annual revenues and expenses are expected to be $40,000 and $19,000 each year, respectively, over the 6-year project period. The salvage value of the equipment at the end of the project period is projected to be $17,000. Assume a MARR of 9%. Find the AW (directly - do not convert from either FW or PW - to the nearest cent).
Problem 11.017 Economic Service Life A piece of equipment has a first cost of $180,000, a maximum useful life of 7 years, and a market (salvage) value described by the relation S = 120,000 - 11,000k, where k is the number of years since it was purchased. The salvage value cannot go below zero. The AOC series is estimated using AOC = 60,000+8,000k. The interest rate is 11% per year. Determine the economic service life and the respective AW. The economic service life is year(s) and the AW value is $
The investment of design 2 is supposed to be $140600. The MARR to be used in the problem is 20%.
An industrial firm is considering purchasing a new machine for $25000. if the machine's capital recovery cost is calculated to be $3500 over its 5-year service life and the firm's MARR is 10% answer the following questions. a) Draw the cash flow diagram and load all the values appropriately. b) What salvage value has the firm assumed in calculating the machine capital recovery costs?
A large city in mid-west needs to buy a street-cleaning machine. A used vehicle will cost $75000 and has a market value of $20000 after its five-year life. A new system cost $150000 and has a market value of $40000 after five-years. The new system has some features that reduce labor hours compared with used system. the used system requires labor hours of 8 hours per day and 20 days per month. the labor costs are $50 per hour. the MARR is 12%. if the new system is expected to be able to reduce labor hours by 20% compared with the used system, which system should the city purchase? and how many hours must the system be operated at the break even?
Steve Company is considering replacing one of its machines. The available new model has a cost of $220,000, a 16-year life, and an AOC of $2,000. The machine must also be serviced every 4 years at a cost of $10,000. The machine can be salvaged at $45, 000. The MARR is 12% How much annual net income must be realized from the machine to recover the capital investment?
You are considering a project with the following financial data: Required initial investment at n = 0: $50M Project life: 10 years Estimated annual revenue: $X (unknown) Estimated annual operating cost: $15M Required minimum return: 20% per year Salvage value of the project: 15% of the initial investmentWhat minimum annual revenue (in $M) must be generated to make the project worthwhile?(a) X = $26.64M(b) X = $28.38M(c) X = $32.47M(d)X = $35.22M
A manufacturing company is evaluating an investment plan to produce a new product based on the following estimated data: • Equipment Cost: $150,000 • Overhead Cost: $30,000/year • Sales price: $12/unit Operation cost: $20/operating hour • Production time: O.1 hour/unit • Planning horizon: 4 years • MARR: 15% Salvage value after 4 years: 0 By using break-even analysis, the break-even sales value for the product should be: Select one: a. 6755 units X b. 8255 units C. 9755 units d. 11,255 units The correct answer is: 8255 units
The following cost and benefit information has been estimated for a pump that has a 10-year useful life. Purchase Cost = $2,400 Annual Operating Cost = $1,200 Annual Maintenance Cost = $300Annual Benefits = $2,000Salvage Value = $200Interest rate specified = 9% or 0.09 Find the capital recovery cost for this pump.
The First cost of a passenger bus is ₽800,000. Its estimated life is 4 years with no salvage value. The operating cost per year of 300 days of operation are as follows: Tires, ₽24,000; gasoline, 60 liters per day at ₽15 per liter; Oil,₽80 per day; maintenance and repair, ₽40,000; labor ₽800 per day; miscellaneous expense, ₽18,000; depreciation, sinking fund at 10%. If the average passenger fare is ₽3.50 for each passenger one way and expected profit or return is 15% determine the minimum average number of passengers that should be transported each day. Use the AW method and Future worth method.

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