The cash flows for two small treatment systems for raw water are seen. Determine which interestshould be chosen at 10 percent per year based on an 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?
