Unlike standard life cycle cost analysis, the Estimated Uniform Annual Cost (EUAC) method expresses life cycle...

 

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Unlike standard life cycle cost analysis, the Estimated Uniform Annual Cost (EUAC) method expresses life cycle costs as an annualized estimate of cash flow instead of a lumpsum estimate of present value. (a) A company is considering buying a computer with the following costs and interest rates: Find the equivalent uniform annual cost (EUAC) of the computer. Initial cost: RM 3900, Salvage value: RM 1800, Useful life: 10 years, Annual maintenance: RM390, Interest rate: 6% (b) Aziz requires approximately 30 kg of bananas each month, January through June, and 35 kg of bananas each month, July through December, to make banana cream pies for her friends, Ali, Widad, Zaid, and his wife. Bananas can be bought at a local market for 40 cents per kg. If Aziz's cost of money is 3%, how much should she set aside at the beginning of each year to pay for the bananas? (c) A project has a first cost of RM10,000, net annual benefits of RM2,000, and a salvage value of RM3,000 at the end of its 10-year useful life. The project will be replaced identically at the end of 10 years and again at the end of 20 years. What is the present value of the entire 30 years of service if the interest rate is 10%? Unlike standard life cycle cost analysis, the Estimated Uniform Annual Cost (EUAC) method expresses life cycle costs as an annualized estimate of cash flow instead of a lumpsum estimate of present value. (a) A company is considering buying a computer with the following costs and interest rates: Find the equivalent uniform annual cost (EUAC) of the computer. Initial cost: RM 3900, Salvage value: RM 1800, Useful life: 10 years, Annual maintenance: RM390, Interest rate: 6% (b) Aziz requires approximately 30 kg of bananas each month, January through June, and 35 kg of bananas each month, July through December, to make banana cream pies for her friends, Ali, Widad, Zaid, and his wife. Bananas can be bought at a local market for 40 cents per kg. If Aziz's cost of money is 3%, how much should she set aside at the beginning of each year to pay for the bananas? (c) A project has a first cost of RM10,000, net annual benefits of RM2,000, and a salvage value of RM3,000 at the end of its 10-year useful life. The project will be replaced identically at the end of 10 years and again at the end of 20 years. What is the present value of the entire 30 years of service if the interest rate is 10%?

Answer rating: 100% (QA)

a Calculate the Equivalent Uniform Annual Cost EUAC for each of the scenarios Computer Purchase Given Initial cost P RM 3900 Salvage value S RM 1800 U... View the full answer