Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 12P
To determine
Calculate the salvage value.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
An electronics firm invested $60,000 in a precision inspection device. It cost $4000 to operate and maintain in the first year and $3000 in each of the subsequent years. At the end of 4 years, the firm changed their inspection procedure, eliminating the need for the device. The purchasing agent was very fortunate in being able to sell the inspection device for $60,000, the original price. The plant manager asks you to compute the equivalent uniform annual cost of the device during the 4 years it was used. Assume interest at 6% per year.
Please show work, preferably not with excel. Will Upvote!
Company X is looking to expand their operations to add a second product line capable of producing 1.25 Million units per year. The total estimated investment cost for the new line is $25 Million, with a salvage value equal to 20% of the purchase price at the end of the 6-year project life. The annual expected sales volume is shown below, in thousands of units: Year 1 2 3 4 5 6Volume 525,000 600,000 725,000 800,000 925,000 1,000,000
The average selling price is fixed for the project life at $125 per unit. Variable costs (per unit) include $35 for materials, $20 for manufacturing, and $18 for labor. There are additional fixed operating and maintenance costs totaling $14.25 Million per year. The company’s working capital calculations are based on a 2.5-month supply of raw materials and 1.5 months of combined inventory (WIP and finished goods) that it maintains to balance overall industry demand. FX…
A factory manager bought a rare machine for $10 million. of the machine The sales value at the end of the first year will be $3 million and the machine will be sold by antique dealers. It is estimated to be valued at $500,000 due to the Initial cost of maintenance Expected to be $300,000 in 3 years and double each year thereafter. In this way, the maintenance cost of the 4th year is $600,000, the maintenance cost of the 5th year is $1,200,000, etc. will be. Calculate the economic life of this machine based on the Minimum Attractive Efficiency Ratio of 15%.
Chapter 6 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Consider the cash flows in Table P6.7 for the...Ch. 6 - Prob. 8PCh. 6 - Prob. 9PCh. 6 - The repeating cash flows for a certain project are...
Ch. 6 - Beginning next year, a foundation will support an...Ch. 6 - Prob. 12PCh. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - Prob. 17PCh. 6 - Prob. 18PCh. 6 - The Geo-Star Manufacturing Company is considering...Ch. 6 - Prob. 20PCh. 6 - Prob. 21PCh. 6 - Prob. 22PCh. 6 - Prob. 23PCh. 6 - Prob. 24PCh. 6 - Prob. 25PCh. 6 - Prob. 26PCh. 6 - Prob. 27PCh. 6 - Prob. 28PCh. 6 - Prob. 29PCh. 6 - Prob. 30PCh. 6 - Prob. 31PCh. 6 - Prob. 32PCh. 6 - Prob. 33PCh. 6 - Prob. 34PCh. 6 - Prob. 35PCh. 6 - Prob. 36PCh. 6 - Prob. 37PCh. 6 - Prob. 38PCh. 6 - Prob. 39PCh. 6 - Prob. 40PCh. 6 - Prob. 41PCh. 6 - Prob. 42PCh. 6 - Prob. 43PCh. 6 - Prob. 44PCh. 6 - Prob. 45PCh. 6 - Prob. 46PCh. 6 - Prob. 47PCh. 6 - Prob. 48PCh. 6 - Prob. 49PCh. 6 - Prob. 50PCh. 6 - Prob. 51PCh. 6 - Prob. 52PCh. 6 - Prob. 53PCh. 6 - Prob. 1STCh. 6 - Prob. 2STCh. 6 - Prob. 3STCh. 6 - Prob. 4ST
Knowledge Booster
Similar questions
- What is the equivalent annual maintenance cost over the infinite servicelife?arrow_forwardThe AW values for retaining a presently owned machine for additional years are shown in the table. Note that the values represent the AW amount for each of the n years that the asset is kept, i.e., if it is kept 5 more years, the annual worth is $−95,000 for each of the 5 years. Assume that future costs remain as estimated for the replacement study and that used machines like the one presently owned will always be available. (a) What is the ESL and associated AW of the defender at a MARR of 12% per year? (b) A challenger with an ESL of 7 years and an AWC = $-90,000 per year has been identified. Which AW will be less for the respective ESL periods? Retention Period, Years AW Value, $ per Year 1 -89,000 2 -95,000 3 -86,000 4 -85,000 5 -95,000 a) The ESL of the defender is ____year(s) with the lowest AW of $_____. b) The (Click to select defender challenger) has the lower AW at $______for n equal to ____ .arrow_forwardTo improve package tracking at a UPS transfer facility, conveyor equipment was upgraded with RFID sensors at a cost of $345,000. The operating cost is expected to be $148,000 per year for the first 3 years and $210,000 for the next 3 years. The salvage value of the equipment is expected to be $140,000 for the first 3 years, but due to obsolescence, it won’t have a significant value after that. The interest rate is 10% per year. Determine the ESL and equivalent AW using tabulated factors.arrow_forward
- The PARC Company can purchase gizmos to be used in building whatsits for $90 each. PARC can manufacture their own gizmos for $7000 per year overhead cost plus $25 direct cost for each gizmo, provided they purchase a gizmo maker for $100,000. PARC expects to use gizmos for 10 years. The gizmo maker should have a salvage value of $20,000 after 10 years. PARC uses 12% as its minimum attractive rate of return. At what annual production rate N should PARC make its own gizmos?arrow_forwardA firm has the capacity to produce 1,000,000 units of product per year. At present, it is able to produce and sell 600,000 units yearly at a total income of P720,000. Annual fixed costs are P250,000 and the variable costs per unit is P0.70. Determine the number of units that should be sold annually to break-even.arrow_forwardLulu hypermarket estimates daily demand of 18 kgs for a product. It costs RO 100 to make and receive an order, and it takes 16 workdays to receive it. The annual holding cost is 25 % of purchase price. The price RO 2 per kg. The company is operating 5 days per week, and a total of 210 workdays in one year. What is the minimum annual total holding and ordering cost in RO? Round-up to the nearest integerarrow_forward
- Evaluate to total present worth of all the cash-flow of machine ABC for an interest rate of 10% per year. Relevant costs are as follows investment cost = $18,000 useful life = 20 years Market value = $5000 Annual operating expenses =$250 Overhead cost end of the 7th year = $500 Overhead cost end of the 14th year = $800arrow_forwardVeritas Inc. has decided to acquire a new Hydraulic Excavator. It has three options. Caterpillar: purchase cost of $354,055 and operating costs of $28,121 per year (paid at the end of each year). John Deere: purchase cost of $288,413 and operating costs of $21,091 per year (paid at the end of each year). Volvo: purchase cost of $323,238 and operating costs of $15,484 per year (paid at the end of each year). Assume that Geek Inc. has a budget of $335,269 and all excavators have a service life of 13 years. Based on the defender-challenger approach and given that the MARR is 10%, compute the incremental Benefit-Cost ratio of choosing the best excavator (note: round your answer to two decimal places; do not include spaces, dollar signs, or commas). Indicate your recommendation as follows: - answer "0" (without the commas) if your recommendation is the Caterpillar; - answer "1" (without the commas) if your recommendation is the John Deere; - write down as your answer the value of the…arrow_forwardsolve it using manual computation; do not use Microsoft Excel The Ajax Corporation has an overhead crane that has an estimated remaining life of 10 years. The crane can be sold now for $8,000. If the crane is kept in service, it must be overhauled immediately at a cost of $5,000. Operating and maintenance costs will be $3,000 per year after the crane is overhauled. The overhauled crane will have zero MV at the end of the 8-year study period. A new crane will cost $20,000, will last for 8 years, and will have a $4,000 MV at that time. Operating and maintenance costs are $1,000 per year for the new crane. The company uses a before-tax interest rate of 10% per year in evaluating investment alternatives. Should the company replace the old crane?arrow_forward
- An industrial firm is considering purchasing a new machine for $25000. if the machine's capital recovery cost is calculated to be $3500 over its 5-year service life and the firm's MARR is 10% answer the following questions. a) Draw the cash flow diagram and load all the values appropriately. b) What salvage value has the firm assumed in calculating the machine capital recovery costs?arrow_forwardYou are given the following financial data about a new system to be implemented at a company:(1) Investment cost at n = 0: $23,000(2) Investment cost at n = 1: $18,000(3) Useful life:10 years(4) Salvage value (at the end of 11 years): $7,000(5) Annual revenues: $19,000 per year(6) Annual expenses: $6,000 per year(7) MARR: 10%Note: The first revenues and expenses will occur at the end of year 2.(a) Determine the conventional-payback period.(b) Determine the discounted-payback period.arrow_forwardProblem 3 A piece of equipment is estimated to cost $86,000 new and to have a useful life of 5 years with a salvage value of $14,000. The company believes that a realistic MARR would be 10%. Taxes, insurance, and storage should amount to an additional 8%, which results in an overall cost of money of 10 + 8, or 18%. To recover ownership cost, what is the appropriate amount per hour that must be charged for the equipment usage if the expected use rate of the equipment is 1,200 hours per year?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education