Alternative R has a first cost of $88,000, annual M&O costs of $62,000, and a $20,000...

Alternative R has a first cost of $88,000, annual M&O costs of $62,000, and a $20,000 salvage value after 5 years. Alternative S has a first cost of $175,000 and a $58,000 salvage value after 5 years, but its annual M&O costs are not known. Determine the M&O costs for alternative S that would yield a required incremental rate of return of 23%. The M&O cost for alternative S is $

Expert Solution

jeff jeffy answered 2 years ago

Alternative 1 has a capital cost of $2,069,000 and annual O&M cost of $348,000 Alternative 2...

Alternative 1 has a capital cost of $2,069,000 and annual O&M cost of $348,000 Alternative 2 has a capital cost of $7,182,000 and annual O&M cost of $394,000 Number of years = 30, interest rate = 3% Compare the two alternatives using the present worth method AND annual cost method. Which is least costly? Are the conclusions same for each method?

Some factory equipment was bought at a cost of $100,000. The O&M costs for the first...

Some factory equipment was bought at a cost of $100,000. The O&M costs for the first year were $10,000 and they are expected to increase by $2,500 per year thereafter. The market value of the equipment declines by 15% per year over its 5-year life. What is the minimum cost life for this equipment? Assume MARR = 4%. Group of answer choices 5 years 3 years 2 years 4 years

Two alternatives are under consideration. The first alternative will cost $100,000, require $20,000 in maintenance and...

Two alternatives are under consideration. The first alternative will cost $100,000, require $20,000 in maintenance and operation costs each year, and a life cycle of 4 years. The second alternative will cost $300,000, require $5,000 in maintenance and operation costs each year and a life of 6 years. Neither option will have a salvage value. In order to compute the present worth or future worth, how many years of each alternative should I use to accurately compare the two alternatives.

A machine cost $30,000 initially and has no salvage value. The O&M costs in year 1...

A machine cost $30,000 initially and has no salvage value. The O&M costs in year 1 were $10,000 and have been increasing by $2,000 from year 2. The minimum cost life of this machine for a MARR of 10 %. (show your solution) A. 4 years B. 2 years C. 6 years D. None of above

A new asset is available for $239,000. O&M costs are $24,000 each year for the first...

A new asset is available for $239,000. O&M costs are $24,000 each year for the first five years, $37,680 in year six, $57,700 in year seven, and $88,300 in year eight. Salvage values are estimated to be $198,000 after one year and will decrease at the rate of 17% per year thereafter. At a MARR of 12%, determine the economic service life of the asset. Enter your answer as an integer from 1 to 8.

A new asset is available for $227,000. O&M costs are $34,000 each year for the first...

A new asset is available for $227,000. O&M costs are $34,000 each year for the first five years, $51,000 in year six, $79,100 in year seven, and $121,800 in year eight. Salvage values are estimated to be $204,000 after one year and will decrease at the rate of 50% per year thereafter. At a MARR of 18%, determine the economic service life of the asset. Enter your answer as an integer from 1 to 8

"A new asset is available for $236,000. O&M costs are $10,000 each year for the first...

"A new asset is available for $236,000. O&M costs are $10,000 each year for the first five years, $13,300 in year six, $19,300 in year seven, and $28,800 in year eight. Salvage values are estimated to be $144,000 after one year and will decrease at the rate of 49% per year thereafter. At a MARR of 10%, determine the economic service life of the asset. Enter your answer as an integer from 1 to 8." Answer is 8

The annual maintenance and operating (M&O) cost was estimated to be $2,500 in Year 1 through...

The annual maintenance and operating (M&O) cost was estimated to be $2,500 in Year 1 through Year 4, and $4,400 in Year 5 through Year 9. Estimate the future value of the M&O cost (at t=9) with an interest rate of 11% per year.

Elgin Restaurant Supplies is analyzing the purchase of manufacturing equipment that will cost $62,000. The annual...

Elgin Restaurant Supplies is analyzing the purchase of manufacturing equipment that will cost $62,000. The annual cash inflows are as follows. Use Appendix D. Year Cash Flow 1 $31,000 2 29,000 3 24,000 a. Determine the IRR using interpolation. (Round the intermediate calculations to the nearest whole dollar. Round the final answer to 2 decimal places.) IRR % b. With a cost of capital of 16 percent, should the machine be purchased? Yes No c. With information from...

A medium-sized industrial grade compressor can be purchased for $35,000. Annual O&M costs are expected to...

A medium-sized industrial grade compressor can be purchased for $35,000. Annual O&M costs are expected to increase $1,300 every year, with a 1st year O&M cost of $2,000. (MARR = AAA+15%, and planning horizon is 10 years) • The compressor salvage value for a given period t, is calculated based on the following equation: Salvage value (t) = $30,000– $3,000 * t a) Find the Optimum Replacement Interval for this Equipment b) Find the Optimum Replacement Interval for this Equipment...

Question