I need help using the IRR and ERR method for this problem. Steps of what's happening would be helpful 2. As the supervisor of a facilities engineering department, you consider mobile cranes to be criticalequipment. The purchase of a new medium-sized, truck-mounted crane is being evaluated. Theeconomic estimates for the two best alternatives are shown in the following table.AB$272,000 $346,00028,80019,300Useful life (years)69Market value (at end of life) $25,000$40,000Capital investmentAnnual expenses"Alternatives"Excludes the cost of an operator, which is the same forboth alternatives.You have selected the longest useful life (nine years) for the study period and would lease a cranefor the final three years under Alternative A. On the basis of previous experience, the estimatedannual leasing cost at that time will be $66,000 per year (plus the annual expenses of $28,800 peryear). The MARR is 15% per year. Show that the same selection is made withb. the IRR method.c. the ERR method.

Assessing capital expenditures or, in cases where numerous choices are mutually exclusive, choosing…

2. As the supervisor of a facilities engineering department, you consider mobile cranes to be critical equipment. The purchase of a new medium-sized, truck-mounted crane is being evaluated. The economic estimates for the two best alternatives are shown in the following table. Alternatives A B $272,000 $346,000 19,300 28,800 6 Capital investment Annual expenses Useful life (years) Market value (at end of life) $25,000 $40,000 "Excludes the cost of an operator, which is the same for both alternatives. You have selected the longest useful life (nine years) for the study period and would lease a crane for the final three years under Alternative A. On the basis of previous experience, the estimated annual leasing cost at that time will be $66,000 per year (plus the annual expenses of $28,800 per year). The MARR is 15% per year. Show that the same selection is made with b. the IRR method. c. the ERR method.

2. As the supervisor of a facilities engineering department, you consider mobile cranes to be critical equipment. The purchase of a new medium-sized, truck-mounted crane is being evaluated. The economic estimates for the two best alternatives are shown in the following table. Alternatives A B $272,000 $346,000 19,300 28,800 6 Capital investment Annual expenses Useful life (years) Market value (at end of life) $25,000 $40,000 "Excludes the cost of an operator, which is the same for both alternatives. You have selected the longest useful life (nine years) for the study period and would lease a crane for the final three years under Alternative A. On the basis of previous experience, the estimated annual leasing cost at that time will be $66,000 per year (plus the annual expenses of $28,800 per year). The MARR is 15% per year. Show that the same selection is made with b. the IRR method. c. the ERR method.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

2. You have been asked to perform a sensitivity analysis on a plant modernization plan. The initial investment is $30,000. Expected annual savings is $13,000. Salvage value is $7,000 after a 7 year planning horizon. The MARR is 12% a. Determine the PW of this modernization. cion 4 2.b. -80% cion 5 2.c. -60% cion 6 2.d. -40% zion 7 2.e. -20% cion 8 2.f. +20% tion 9 2.g. +40% cion 10 2.h. Determine the percentage change in net annual savings that causes a reversal in the decision regarding the attractiveness of the project 10 10 00 00 10- 10 00
plan A plan B plan C Down payment 10,000.00 8,000.00 5,238.23 Annual payments 3,549.24 10,056.47 2,540.40 Years 25 25 25 Discount rate 14% 14% 14% What is the present value of plan C?
! Required Information The Bureau of Indian Affairs provides various services to American Indians and Alaska Natives. The Director of Indian Health Services is working with chief physicians at some of the 230 clinics nationwide to select the better of two medical X-ray system alternatives to be located at secondary-level clinics. X-Ray Systems First cost, $ Annual operating cost, $/year Overhaul In year 3, $ Overhaul in year 4, $ Salvage value, $ Expected life, years Del Medical Siemens -210,000 -184,000 -191,000 -195,000 -26,000 -140,000 50,000 10,000 6 At 5% per year, select the more economical system. Solve using tabulated factors. The present worth of Del Medical is $-| 831620 and the present worth of Siemens is $- The more economical system is (Click to select) ▼
4. A semiconductor manufacturer has been ordered by the city to stop discharging untreated, acidic waste liquids into the city sewer system. Your analysis shows you could select any one of the three systems that can treat the waste of the said establishment. System Doxhill Slowsilver Evergreen Installed Cost P1,500,000 P1,750,00 P4,000,000 Annual Operating Cost P300,000 P250,000 P50,000 Salvage Value at End of 20 Years P100,000 P250,000 P2,000,000 If the system is expected to last and be used 20 years and money is worth 8%, which system should be purchased? Use FW method.
5. A small branch office of a contracting company is planning to purchase a new laser printer. Three vendors have supplied cost, useful life, and estimated salvage value data, shown in the following table. The MARR is 12%. Investment (first) cost Annual service cost Salvage value Useful life A $800 $180/yr $200 5 years Laser printer B $1,400 $150/yr $825 5 years C $900 $170/yr $100 5 years Draw cash flows for these alternatives. If the expected annual saving in labor is $500 regardless of which machine is purchased, what are the annual equivalent values of these alternatives.
1. A certain company is considering two types of machine for its operation. The data are as follows: Machine A First cost P150,000 Life 4 yrs Salvage value P15,000 Annual operating cost P48,000 Annual taxes P4,200 Annual repairs P7,200 Machine B First cost P200,000 Life 8 yrs P10,000 Salvage value Annual operating cost P32,000 Annual taxes P7,200 Annual repairs P4,200 If money is worth 12% compounded annually, compute the difference of the annual worth of the two machines.
Kiwidale Dairy is considering purchasing a new ice-cream maker. Two models, Smoothie and Creamy, are available and their information is given below. (perform all calculation using 5 significant figures, and give your final answer to 1 decimal place). (a) What is Kiwidale's MARR that makes the two alternatives equivalent? Use a present worth comparison. Smoothie 17,000 Creamy 40,000 12 years 12,000 3,920 5,400 First Cost Service Life Annual profit Annual operating cost Salvage value A MARR which makes the two alternatives equivalent in term of PW is 12 years 4,800 1,200 2,450
New ans if possible pllss expert
Legel Q L Given Given 76 248 492 +84 1.100 1,416 1.708 1.952 - NM & 1 2 3 4 S 9 > 7 8 K Given S N N N N N N N N 241 2 2 APL Q/L 76 124 A 961 220 B ttc 244 MPL AQ/AL J 244 292 316 ta DEMON
IC OM B D Life/years X OY OZ OW OV Y $420,000 $45,000 $110,000 $20,000 10 Z $540,000 $35,000 $260,000 $45,000 20 W V $500,000 $200,000 $50,000 $20,000 $80,000 $180,000 $10,000 $30,000 10 20 $250,000 $40,000 $90,000 $10,000 15 based on the above ME alternatives and using the B/C analysis, which alternative we should select?i=10%. X
2. A certain company is considering two types of machine for its operation. The data are as follows: Machine A First cost P150,000 Life 4 yrs Salvage value P15,000 Annual operating cost P48,000 Annual taxes P4,200 Annual repairs P7,200 Machine B First cost P200,000 Life 8 yrs P10,000 Salvage value Annual operating cost P32,000 Annual taxes P7,200 Annual repairs P4,200 If money is worth 12% compounded annually, compute the difference of the present worth of the two machines.
Suggest three best approach in improving ethical behaviour for sunway reit. 400 words