Question: kindly solve these problems In our progressive example, B&T Enterprises is considering the replacement of a 2-year-old kiln with a new one to meet emerging
kindly solve these problems





In our progressive example, B&T Enterprises is considering the replacement of a 2-year-old kiln with a new one to meet emerging market needs. When the current tunnel kiln was pur- chased 2 years ago for $25 million, an ESL study indicated that the minimum cost life was be- tween 3 and 5 years of the expected 8-year life. The analysis was not very conclusive because the total AW cost curve was flat for most years between 2 and 6, indicating insensitivity of the ESL to changing costs. Now, the same type of question arises for the proposed graphite hearth model that costs $38 million new: What are the ESL and the estimated total AW of costs? The Manager of Critical Equipment at B&T estimates that the market value after only 1 year will drop to $25 million and then retain 75% of the previous year's value over the 12-year expected life. Use this market value series and i = 15% per year to illustrate that an ESL analysis and marginal cost analysis result in exactly the same total AW of cost series.11.13 An engineer determined the ESL of a new $80 000 piece of equipment and recorded the calculations shown below. [Note that the num- bers are annual worth values associated with various years of retention; that is, if the equip- ment is kept for, say, 3 years, the AW (years I through 3) of the first cost is $32,169, the AW of the operating cost is $51,000, and the AW of the salvage value is $6042 ] The engineer forgot to enter the AW of the salvage value for 2 years of retention. From the information available, deter- mine the following: [a) The interest rate used in the ESL calculations. (b) The salvage value after 2 years, if the total AW of the equipment in year 2 was $78,762 Use the interest rate determined in part (a). Years AW of AW of AW of Retained First Cost, $ Operating Cost, $ Salvage Value, $ -45 000 -46 095 -46 000 7 -32,167 6042 11.14 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 & years. Its salvage value, which decreases by 13%% per year, is de- scribed by the equation S = 70,000(1 - 0.15)- where a 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?\f\f\f
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