ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Chapter 13, Problem 2P
To determine
To find: Equivalent uniform annual cost of the machine and its economic life.
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A machinge has a first cost of $24,000. Its market value declines by 20% annually. The repair costs are covered by the warranty in Year 1, and then they increase $900 per year. The firm's MARR is 12%. Find the minimum EUAC for this machine and its economic life.
A machinge has a first cost of $24,000. Its market value declines by 20% annually.
The repair costs are covered by the warranty in Year 1, and then they increase
$900 per year. The firm's MARR is 12%. Find the minimum EUAC for this
machine and its economic life.
The sprayer's base price is $900,000, and it would cost another $21,000 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $510,000. The MACRS rates for the first three years are 0.3333, 0.4445, and 0.1481. The machine would require an increase in net working capital (inventory) of $15,500. The sprayer would not change revenues, but it is expected to save the firm $348,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 25%. (Ignore the half-year convention for the straight-line method.) Cash outflows, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dollar.
Chapter 13 Solutions
ENGR.ECONOMIC ANALYSIS
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