ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question
Chapter 5, Problem 24P
(a)
To determine
To find:The truck that the firm should buy out of the two models, Model A and Model B.
(b)
To determine
Introduction: The second part requires to decide what the firm should do in the event of the dealer sells out of Model B.
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Appledale Dairy is considering upgrading an old ice-cream maker. Moderate upgrading costs $7050 now and yields annual savings of $4800 in the first year, and decreases by $300 dollars every year after that. If the upgraded ice-cream maker will last for seven years, what is the present worth of the upgrading option? Use a present worth comparison. Appledale's MARR is 9 percent.
Please choose one of the following options. Double check your work. There is no additional information. This is the question and those are your options. PW analysis stands for Present Worth Analysis. It is a term used in engineering economics.
What will be the total lifetime for every project if we compare them with PW analysis? Project A has a lifetime of 9 years, project B has a lifetime of 7 years, and project C has a lifetime of 3 years.
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Your company is determing whether or not it should invest in a new pallet wrapping station. The station would cost $6,500 and your company's MARR is 13%. You estimate the purchasing a pallet wrapper would save you $2,000 in labor annually, and at the end of 3 years you would realize a salvage value of $400. How would you calculate the present worth of this investment in Excel?
Chapter 5 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 5 - Prob. 1QTCCh. 5 - Prob. 2QTCCh. 5 - Prob. 3QTCCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 7P
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- You are financial analyst for the XYZ company. The director has asked you to analyze two proposed capital investments, Project A and Project B. Each project has a cost of RM 10, 000, and the cost of capital for each project is 12 percent. The project s’ cash flows are as follows: Year Expected Net Cash Flows Project A Project B 0 (10,000) (10,000) 1 6500 3500 2 3000 3500 3 3000 3500 4 1000 3500 Calculate each project’s NPV. Which project or projects should be accepted?arrow_forwardPLEASE USE EXCEL AND SHOW FORMULAS:A new engineer is evaluating whether to use a larger diameter pipe for a water line. The pipe will cost $376,183 more initially but will reduce pumping costs. The optimistic, most likely, and pessimistic projections for annual savings are $30,000, $20,000, and $5000, with respective probabilities of 20%, 50%, and 30%. The interest rate is equally likely to be 6% or 8% (use 7% as most likely), and the water line should have a life of 40 years.a) Find the PW for the pessimistic case, the most likely case, and the optimistic case. Then determine the Expected PW based on these.b) Find the expected annual savings and the expected interest rate. Determine the Expected PW based on these.arrow_forwardStock Y is currently priced at $25/share and pays dividends continuously at a rate proportional to its price at a constant rate of 3%. An investor short sells 500 shares of the stock and repays dividends by borrowing extra shares of stock Y. After two months the investor closes out all positions when the stock is priced at $24/share. The continuously compounded risk-free interest rate is 5%. Calculate the two-month profit.arrow_forward
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