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?

Expert Solution

Ally Wells answered 11 months ago

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 $

Consider these two alternatives. Alternative 1 Alternative 2 Capital investment ? $4400 ? $6400 Annual revenues...

Consider these two alternatives. Alternative 1 Alternative 2 Capital investment ? $4400 ? $6400 Annual revenues ?$1450 ?$1950 Annual expenses ?$370 ?$510 Estimated market value ?$850 ? $1250 Useful life 9 years 12 years a. Suppose that the capital investment of Alternative 1 is known with certainty. By how much would the estimate of capital investment for Alternative 2 have to vary so that the initial decision based on these data would be? reversed? The annual MARR is 18?% per...

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.

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

Alternative A has an initial acquisition cost of $10,000 and an annual average operating and maintenance...

Alternative A has an initial acquisition cost of $10,000 and an annual average operating and maintenance cost of $1402 per down time. Alternative B has a higher acquisition cost of $20,000, but has a lower annual average operating and maintenance cost of $500 per down time. With an expected lifetime of 5 years for both alternatives, and an annual interest of 5%, determine the break even number of down times per year. please show all work

o The initial capital cost will be $500,000 paid at the beginning of year 1 (i.e.,...

o The initial capital cost will be $500,000 paid at the beginning of year 1 (i.e., immediately). The impact on cottage owners will involve a loss of $50,000 at the end of each year for the first four years (because of the construction activities affecting property values) but cottage owners will benefit by $55,000 per year in perpetuity from the end of year 5 onwards. The benefits from recreational fishing will not start until the end of year 5 and...

Pine Village council proposes to construct new recreation fields. Construction will cost $350,000 and annual O&M...

Pine Village council proposes to construct new recreation fields. Construction will cost $350,000 and annual O&M expenses are $80,000. The city council estimates that the value of added youth leagues is about $125,000 annually. In year 6 another $90,000 will be needed to refurnish the fields. the city council agrees to transform the ownership of the fields to a private company for $150,00 at the end of year 10. a. Draw the cash flow diagram. b. If the MARR for...

1 A renewable energy electricity supply technology has the following characteristics: Capital cost ($) Annual operating cost...

1 A renewable energy electricity supply technology has the following characteristics: Capital cost ($) Annual operating cost ($) Lifetime (years) Salvage value ($) Annual electricity supplied (MWh) 380 000 29 500 25 42 000 380 If the owner can sell the electricity at 30 c/kWh, calculate the lifecycle cost of the technology over an assessment period of 25 years at a real discount rate of 5% Calculate the average unit cost of the power in present value terms (in cents/kWh) supplied...

1 A renewable energy electricity supply technology has the following characteristics: Capital cost ($) Annual operating...

1 A renewable energy electricity supply technology has the following characteristics: Capital cost ($) Annual operating cost ($) Lifetime (years) Salvage value ($) Annual electricity supplied (MWh) 300 000 27 200 25 40 000 400 If the owner can sell the electricity at 25 c/kWh, what is the simple payback period for the technology? Would the owner invest in this technology if (s)he set a strict maximum four-year payback period? What would the selling price for the electricity have to...

2. Project A will cost $100,000 and requires working capital of $20,000. Annual revenue of $21,000...

2. Project A will cost $100,000 and requires working capital of $20,000. Annual revenue of $21,000 and expenses of $5,000 for five years. In the fifth year there will be salvage value of $8,000. Should the project be accepted with a discounted rate of 14%. Annuity rate 2.91371; Single factor rate .51937.

Question