3.2 Each van has a diesel engine and therefore are costly and environmentally unfriendly. They are...
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3.2 Each van has a diesel engine and therefore are costly and environmentally unfriendly. They are 8 years old and can be sold for 2,500 each. Assume their market value (MV) in 2 years will be 300 each. Each van's annual maintenance expenses are expected to be 300 into the foreseeable future and they average only 35 miles per gallon of diesel. Diesel costs 6.00 per gallon, and each van will be used for about 3000 miles per year. If you sell the old vans, you can buy a newer model for 12,000. It will be under a maintenance warranty for two years, so this expense is negligible. The newer van will be a hybrid and therefore it would average 56 miles per gallon of fuel and will have an MV of 9,500 in two years. Use a two-year study period to determine which alternative is preferred. The MARR is 12% per year. [20%] 3.3 A steel works company purchased a plasma cutter, large scale metal cutting, 3 years ago at a cost of 127,000. The current market value of the machine is 100.000 andit can be kept in service for more than 8 year. MARR is 15% annually and the project net annual receipts and end-of-year market values for the machine are shown below. When is the best time for the company to abandon using this equipment? Net Annual Receipts Market Value 1 45,000 97,000 2 45,000 90,000 3 40,000 81,000 End of Year 4 35,000 75,000 6 5 30,000 22,000 70,000 60,000 7 19,000 52,000 8 15,000 42,000 3.2 Each van has a diesel engine and therefore are costly and environmentally unfriendly. They are 8 years old and can be sold for 2,500 each. Assume their market value (MV) in 2 years will be 300 each. Each van's annual maintenance expenses are expected to be 300 into the foreseeable future and they average only 35 miles per gallon of diesel. Diesel costs 6.00 per gallon, and each van will be used for about 3000 miles per year. If you sell the old vans, you can buy a newer model for 12,000. It will be under a maintenance warranty for two years, so this expense is negligible. The newer van will be a hybrid and therefore it would average 56 miles per gallon of fuel and will have an MV of 9,500 in two years. Use a two-year study period to determine which alternative is preferred. The MARR is 12% per year. [20%] 3.3 A steel works company purchased a plasma cutter, large scale metal cutting, 3 years ago at a cost of 127,000. The current market value of the machine is 100.000 andit can be kept in service for more than 8 year. MARR is 15% annually and the project net annual receipts and end-of-year market values for the machine are shown below. When is the best time for the company to abandon using this equipment? Net Annual Receipts Market Value 1 45,000 97,000 2 45,000 90,000 3 40,000 81,000 End of Year 4 35,000 75,000 6 5 30,000 22,000 70,000 60,000 7 19,000 52,000 8 15,000 42,000
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To determine the preferred alternative in question 32 and the best time to abandon using the equipment in question 33 we need to calculate the Net Pre... View the full answer
Related Book For
Engineering Economy
ISBN: 978-0133439274
16th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Posted Date:
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