Question #1:
A railroads company needs to purchase measuring equipment for its preventative maintenance tasks. If it is purchased, this equipment is expected to help the company in saving $100,000 in years 1 through 5; $110,000 in year 6; and increasing by a fixed amount of $10,000 each year after through year 10.
a) Draw the cash flow diagram.
b) Assuming an interest rate of 10% per year, what is the equivalent present worth over the 10 years of the savings?
Question #2:
The cost of tuition at private universities has been increasing for many years, One university announced to keep tuition at the same cost for 4 year for every student, who finished in the top 10% of their year - batch. One such student planned to start at this university, and continue there until earning a doctorate degree (a total time of 9 year). If the tuition for the first 4 year is $7,200 per year, and it increase by 5 % each year for the following 5 years:
a) Draw the cash flow diagram.
b) What is the present worth of the cost of tuition, assuming an interest rate of 8% per year?
Question #3:
A chemicals company is considering selecting one of three methods to dispose its waste. They are: land application. fluidized-bed incineration, and private disposal contract. Data estimates for each method are shown below.
Determine the best method using EITHER the present worth OR the annual worth, assuming an interest rate of 10% per year.
|
Land Application |
Incineration |
Contract |
| First cost $ |
- 1.30.000 |
-900 |
0 |
| Annual operating |
95, 000 |
-60 |
-120 |
| Cost $ per year |
|
|
|
| Salvage value, $ |
25 |
300 |
0 |
| Life, years |
3 |
6 |
2 |
Question #4:
Consider the two models shown below, for a security system surrounding a power distribution substation. Determine the best system using the annual worth analysis, assuming an interest rate of 10% per year.
|
Condi |
Torro |
| First cost $ |
- 25.000 |
- I 30.000 |
| Annual cost. $ per year |
-9.000 |
-2.5 |
| Salvage value. $ |
3 |
150 .000 |
| Life, years |
3 |
∞
|
Question 5:
which mactlitte
Consider the two Machine X and Y shown below. Determine which macine should be selected using the incremental Rate of Return(ROR) analysis method, assuming the company's MARR is 15% per year.
|
Machine X |
Machine Y |
| First cost, $ |
-50,000 |
-125,000 |
| Annual operating cost, $per year |
-8600 |
-2000 |
| Annual revenue, $per year |
22,000 |
45000 |
| Selvage value $ |
30000 |
8,000 |
| Life year |
3 |
6 |
Question #6:
Consider the three investment alternatives A, B and C shown below. List all possible mutually exclusive bundles (or a budget limit of $50, 000. Calculate their initial investment, annual net cash flow (NCF), and present-worth's. Which investment bundle is the best?
Assume Marr is 15 %
| Project |
Initial investment, $ |
Annual NCF |
Life year |
Salvage value,$ |
| A |
-25,000 |
6,000 |
4 |
4000 |
| B |
-20,000 |
9,000 |
4 |
0 |
| C |
-50,000 |
15,000 |
4 |
2000 |
Question #7:
Consider the cash flow amounts, shown below, for a certain public project. Find the conventional Benefit/cost ratio, assuming an annual interest rate of 10%.
| PW,$ |
AW,$/year |
FW,$ |
|
| First cost |
100 |
- |
259.37 |
| O&M cost |
61.446 |
10 |
159.374 |
| Benefits |
- |
40 |
637,496 |
| Disbenefits |
30,723 |
5 |
- |
Question #8:
A petrochemical company has just installed an HVAC system, with a first cost $25,000. The company is planning it to replace it after 5 years, where It could be salvaged then at a value of $5,000. Determine the book-value of $500. Determine the book value table(including depreciation charges) for its usage-life at the company, using
a. Straight-line (SL) depreciation
b. Double-Declining-Balance (DDB) depreciation.
Question 9:
XYZ- industries is planning either to upgrade the current control system, or purchase a new one for its factory. The factory has currently a control system, which was purchased 4 year ago for $250, 000; and it can be quickly sold for a value of $20,000 . Furthermore, the system can be upgrade now for an amount of 100,000; and be kept for another 4 more years; after Which it would be then sold $40000. Alternatively, a new control system could be purchased for a cost of $ 270,000. The new system is expected to have a 10-Year life span, with a $50,000 salvage value then. Should the company upgrade or replace its factory's control-system? Use an MARR of 20 % per year.
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