ENGR 310, HOMEWORK # 3 CHAPTER 5 1. A company is considering two alternatives fo
ID: 1117478 • Letter: E
Question
ENGR 310, HOMEWORK # 3 CHAPTER 5 1. A company is considering two alternatives for manufacturing a certain part. Method R will have a first cost of $40,000, an annual operating cost of $25,000, and a $10,000 salvage value after its five year life. Method S will have an initial cost of $100,000, an annual operating cost of $15,000, and a $12,000 salvage value after its 10 year life. At an interest rate of 12% per year, which alternative should be chosen? 2, Compare the alternatives shown below on the basis of a present-worth comparison. The interest rate is 16% per year. Alternative I 147,000 Alternative II 56,000 30,000 in year 1: Increasing by S1,000 per year 2,000 First Cost Annual Cost 11,000 in year 1: Increasing by $500 per year 5,000 6 Salvage Value Life, Years An alternative for manufacturing a certain part has a first cost of $50,000, an annual cost ors 10,000, and a salvage value of $5,000 after its 10 year life. At an interest rate of 10% per year, what is the capitalized cost of the alternative? 3.Explanation / Answer
The equivalent A for salvage value, for 10 years at 10% = 5000(A/F,10%,10) = 5000*0.062745
The equivalent A for initial investment, for 10 years at 10% = 50000(A/P,10%,10) = 50000*0.162745
Equivalent Annuity for all cost and payments,A = -50000*0.162745-10000+ 5000*0.062745 = -17823.525
Capitalized cost = A/i = -17823.525/0.1 = -$178235.25
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.