Professor Pincushion considers replacing a steam separator in the Pyrex Lab in order to get more...
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Professor Pincushion considers replacing a steam separator in the Pyrex Lab in order to get more accuracy chemical research results. The financial data for the new improved machine is as follows: Investment Salvage Salvage decrease O&M $25,000 $19,000 ΕΟΥ 1 (per year) ΕΟΥ 1 10% $5,000 20% O&M Cost increase (per year) Investment cost $25,000 (installed) Estimated useful life of 5 years • Salvage value of $19,000 after the first year, decreasing at a rate of 10% each year. Operating and maintenance costs are expected to be $5,000 in the first year increasing at a rate of 20% each year. The financial data for the old machine (still in use) is as follows: $18,000 $13,000 15% Market Value Salvage Salvage decrease O&M O&M Cost increase ΕΟΥ 1 $6,000 20% (per year) ΕΟΥ 1 (per year) Estimated useful life of 5 years • Salvage value of $13,000 after the first year (from today), decreasing at a rate of 15% each year. Current market value of $18,000 Operating and maintenance costs for the next 5 years are expected to be $6,000 in the first year increasing at a rate of 20% each year. With a MARR of 12%, calculate the following: a. Calculate the economic service life for each option. [5 + 5 points] b. What are your conclusions? [2 points] c. When should the defender be replaced? [1 points] Professor Pincushion considers replacing a steam separator in the Pyrex Lab in order to get more accuracy chemical research results. The financial data for the new improved machine is as follows: Investment Salvage Salvage decrease O&M $25,000 $19,000 ΕΟΥ 1 (per year) ΕΟΥ 1 10% $5,000 20% O&M Cost increase (per year) Investment cost $25,000 (installed) Estimated useful life of 5 years • Salvage value of $19,000 after the first year, decreasing at a rate of 10% each year. Operating and maintenance costs are expected to be $5,000 in the first year increasing at a rate of 20% each year. The financial data for the old machine (still in use) is as follows: $18,000 $13,000 15% Market Value Salvage Salvage decrease O&M O&M Cost increase ΕΟΥ 1 $6,000 20% (per year) ΕΟΥ 1 (per year) Estimated useful life of 5 years • Salvage value of $13,000 after the first year (from today), decreasing at a rate of 15% each year. Current market value of $18,000 Operating and maintenance costs for the next 5 years are expected to be $6,000 in the first year increasing at a rate of 20% each year. With a MARR of 12%, calculate the following: a. Calculate the economic service life for each option. [5 + 5 points] b. What are your conclusions? [2 points] c. When should the defender be replaced? [1 points]
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Related Book For
Essentials of Statistics for the Behavioral Sciences
ISBN: 978-1285056340
8th Edition
Authors: Frederick J Gravetter, Larry B. Wallnau
Posted Date:
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