- The cash flows for two small treatment systems for raw water are seen. Determine which
**interest****annual**value review.

- Between two separate labeling devices, the manager of a canned food processing plant has to decide. Machine A would have an initial cost of $42,000, an average cost of $28,000 for maintenance, and a service life of 4 years. During its four-year life, Machine B would cost $51,000 to purchase and will have an annual operating cost of $17,000. Which should be chosen on the basis of a present value analysis (SAME YEAR) at an interest rate of 10 percent per year?

M-AInitial cost = $42,000Annual Ave cost = $28,0004 years | M-BInitial cost = $51,000Annual Ave cost = $17,0004 years |

- A major semiconductor business offers company stock as part of the compensation plan in order to retain high-performing engineers. In one specific year, 1000 shares of either class A or class B stock were offered by the company. At the time, the class A stock was selling for $30 per share, and stock market analysts expected that it will grow for the next 5 years at a rate of 6 percent per year. Class B stock sold for $20 per share, but it was anticipated that its price would rise by 12 percent per year. What stock should the engineers pick based on a present value analysis and a
**5-year planning horizon at an interest rate of 8 percent per year?**

CLASS-A$30/share5 years6% | CLASS-B$20/sharePer year12% |

- One of three separate assembly methods has to be selected by an electric switch manufacturing company. The first cost of Method A will be $40,000, the average operating cost will be $9000, and the service life will be 2 years. Method B would cost $80,000 to purchase, and during its 4-year service life, it will have an average operating cost of $6000. Method C would initially cost $130,000 with an estimated running cost over its 8-year life of $4000. There will be no salvage value for methods A and B, but method C will have some equipment worth an estimated $12,000. Which should be the selected method? At a rate of interest of 10 percent per year, utilizing present value analysis.

METHOD-ACost I = 40 000AC = 9 0002 years | B80 0006 00004 years | C130 0004 0008 yearsSALVAGE V= 12 000 |

- Two robots are being considered by an industrial engineer for purchase by a fiber-optic manufacturing firm. Robot X would have an initial cost of $80,000, $30,000 in future maintenance and operation (M&O) costs, and a salvage value of $40,000. Robot Y will have a first cost of $97,000, a $27,000 annual M&O cost, and a salvage value of $50,000. Which one should be chosen at an interest rate of 15 percent per year based on a potential value comparison?

Using a **3-year duration of the study**.

XCC1 = 80 000M,O = 30 000Salv = 40 0000 | Y97 00027 00050 000 |

- A wealthy businessman wants to start a permanent fund to support sustainability-oriented science. For each of the next 5 years, the donor aims to donate equivalent sums of money, plus one now (i.e. six donations), so that $100,000 a year can be withdrawn indefinitely every year, starting in year 6. How much money must be donated each time if the fund receives interest at a rate of 8 percent per annum?

100 000/year

5 years