1. For equipment that has a first cost of $10,000 and the estimated operating costs and...

 

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1. For equipment that has a first cost of $10,000 and the estimated operating costs and year- end salvage values shown below, determine the economic ser- vice life at i-10% per year. Year Operating Cost, S per Year Salvage Value, $ 1 -1000 7000 2 -1200 5000 3 -1300 4500 -2000 3000 -3000 2000 2. A large, standby electricity generator in a hospital operating room has a first cost of $70,000 and may be used for a maximum of 6 years. Its salvage value, which decreases by 15% per year, is described by the equation S-70,000(1 -0.15)", where n is the number of years after purchase. The operating cost of the generator will be constant at $75,000 per year. At an interest rate of 12% per year, what are the economic service life and the associated AW value? 3. A pulp and paper company is evaluating whether it should retain the current bleaching process that uses chlorine dioxide or replace it with a proprietary "oxypure" process. The relevant information for each process is shown. Use an interest rate of 15% per year to perform the replacement study. Original cost 6 years ago. $ Investment cost now. S Current market Current Process -450 000 Oxypure Process -700.000 25.000 value, $ Annual operating -180,000 -70,000 cost. $/year Salvage value, $ 50,000 Remaining life. years 5 10 4. The table below shows present worth calculations of the costs associated with using a presently owned machine (defender) and a possible replacement (challenger) for different numbers of years. Determine when the defender should be replaced using an interest rate of 10% per year and a 5-year study period. Number of Years Kept/Used PW If Kept/Used Stated Number of Years, S Defender Challenger -36,000 -89,000 1 -75.000 -96,000 2 -125.000 -102.000 3 -166.000 -113.000 -217.000 -149.000 1. For equipment that has a first cost of $10,000 and the estimated operating costs and year- end salvage values shown below, determine the economic ser- vice life at i-10% per year. Year Operating Cost, S per Year Salvage Value, $ 1 -1000 7000 2 -1200 5000 3 -1300 4500 -2000 3000 -3000 2000 2. A large, standby electricity generator in a hospital operating room has a first cost of $70,000 and may be used for a maximum of 6 years. Its salvage value, which decreases by 15% per year, is described by the equation S-70,000(1 -0.15)", where n is the number of years after purchase. The operating cost of the generator will be constant at $75,000 per year. At an interest rate of 12% per year, what are the economic service life and the associated AW value? 3. A pulp and paper company is evaluating whether it should retain the current bleaching process that uses chlorine dioxide or replace it with a proprietary "oxypure" process. The relevant information for each process is shown. Use an interest rate of 15% per year to perform the replacement study. Original cost 6 years ago. $ Investment cost now. S Current market Current Process -450 000 Oxypure Process -700.000 25.000 value, $ Annual operating -180,000 -70,000 cost. $/year Salvage value, $ 50,000 Remaining life. years 5 10 4. The table below shows present worth calculations of the costs associated with using a presently owned machine (defender) and a possible replacement (challenger) for different numbers of years. Determine when the defender should be replaced using an interest rate of 10% per year and a 5-year study period. Number of Years Kept/Used PW If Kept/Used Stated Number of Years, S Defender Challenger -36,000 -89,000 1 -75.000 -96,000 2 -125.000 -102.000 3 -166.000 -113.000 -217.000 -149.000