# Project #35948 - Fire Dynamic

Here is my homework. Please do calculations on Excel or on word document. I need all calculations on how you got the answer! Thank you

1.      Your first assignment as an engineering technology graduate from the University of Alabama is to recommend to management which of two equipment candidates should be selected. The two candidates have the following parameters (MARR = 15% per year):

Candidate X: useful life of 8 years; estimated market value at end of life of \$800; annual running expenses of \$400; annual revenues produced of \$1,600 and an initial installed cost of \$4,500.

Candidate Y: useful life of 10 years; estimated market value at end of life of \$1,200; annual running expenses of \$500; annual revenues produced of \$1,850 and an initial installed cost of \$6,000.

Question (a): Given all the above factors, which candidate should be selected?

Question (b): By how much would the estimated capital investment for the alternate candidate [the candidate not selected above in (a)] have to vary from your first decision in (a)?

Question (c): All other factors being the same except the life of Candidate X, what would be the life of Candidate X if the decision is a tossup, that is, no one Candidate has an economic advantage over the other?

2.      The company you work for asks you to recommend whether their Mercedes truck should be replaced now or kept in service for an additional 10 years. The following data is provided to you: the truck can be sold now for \$8,000 but it needs an engine overhaul that costs \$4,000. Once this overhaul is complete, the truck will have maintenance expenses of \$3,000 per year. At the end of 10 years, the truck will have a zero market value. A new truck costs \$18,000 including tax, title, and license and would be used for 10 years with a market value of \$4,000 at the end of the 10 years. owever, operHHHowever, maintenance expenses are predicted to be \$1,000 for the new truck. All other costs such as fuel, oil, and insurance are the same for the old or new truck.

The company wishes to use a 10% interest as their internal rate of return. Should the existing truck be replaced? Show all computation leading to your answer, i.e. no

guessing.

3.      You are asked questions about 5 mutually exclusive candidates described as follows (all quantities are in thousands):

Candidate 1: Present worth of costs = \$1,000; Present worth of benefits = \$8,000

Candidate 2: Present worth of costs = \$4,000; Present worth of benefits = \$8,000

Candidate 3: Present worth of costs = \$4,000; Present worth of benefits = \$14,000

Candidate 4: Present worth of costs = \$10,000; Present worth of benefits = \$ 16,000

Candidate 5: Present worth of costs = \$12,000; Present worth of benefits = \$ 24,000

(a)    Which system has the largest B/C ratio and should it be selected without further study or not? Explain.

(b)   Which system shows the largest incremental B/C ratio based on differences between alternatives?

(c)    Which system would you recommend and why?

 Subject Science Due By (Pacific Time) 07/23/2014 03:00 pm
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