New equipment used to control the thickness of fibre cement sheet cladding is being developed. It...
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New equipment used to control the thickness of fibre cement sheet cladding is being developed. It is estimated to sell for $130,000 more than the current design. Based on present product data, the typical installer has the following probabilities of achieving different performance results and cost savings (relative to the current unit) in the first year of operation (assume these annual cost savings would be escalated 5% per year thereafter; a five-year analysis period is appropriate for this situation; the before-tax market MARR is 18% per year; and the net MV at the end of five years is 0): Performance Results Optimistic Most likely Pessimistic ο οο Probability 0.20 0.60 0.20 Calculate the E(PW) and determine whether the new equipment is economically preferable to the current equipment. $12,500, old preferable $12,500, new preferable $16,212, old preferable $16,212, new preferable $19,720, new preferable Cost Savings in First Year $65,000 42,500 17,000 New equipment used to control the thickness of fibre cement sheet cladding is being developed. It is estimated to sell for $130,000 more than the current design. Based on present product data, the typical installer has the following probabilities of achieving different performance results and cost savings (relative to the current unit) in the first year of operation (assume these annual cost savings would be escalated 5% per year thereafter; a five-year analysis period is appropriate for this situation; the before-tax market MARR is 18% per year; and the net MV at the end of five years is 0): Performance Results Optimistic Most likely Pessimistic ο οο Probability 0.20 0.60 0.20 Calculate the E(PW) and determine whether the new equipment is economically preferable to the current equipment. $12,500, old preferable $12,500, new preferable $16,212, old preferable $16,212, new preferable $19,720, new preferable Cost Savings in First Year $65,000 42,500 17,000
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Answer rating: 100% (QA)
the correct option is 16212 new preferable Heres how we can calculate the Expected Present Worth EPW ... View the full answer
Related Book For
Process Dynamics and Control
ISBN: 978-1119385561
4th edition
Authors: Dale E. Seborg, Thomas F. Edgar, Duncan A. Mellichamp, Francis J. Doyle
Posted Date:
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