1. Earth moving equipment has been purchased. It has basic cost $90.000,
n = 20 years and SV $18.000. for the years 2, 7, 12 and 18, compute
annual depreciation charge using DDB.
2. A replacement study is to be performed on pressing equipment in an
industrial laundry. The challenging asset has a computed EUAWC =
$42.000 for its anticipated 10 years life. Through data collection on the
defender has resulted in the following projected annual operating costs
(AOC) and trade in values for the next 5 years, after which the currently
owned equipment would have to be replaced.
Additional years
AOC
Trade-in
retained
value
1
$30.00
$32.000
0
2
$26.00
$26.000
0
3
$24.00
$18.000
0
4
$24.00
$5.000
0
5
$24.00
0
0
If the current equipment is kept for another 5 years, it will cost a net
estimated $2000 to remove it from the plant. Perform one-additional year
replacement analysis at a 16% per year return to determine how many
years to keep this asset before replacing it with the challenger
3. New investment funds for The System Company are restricted to
$100.000 for next year. Select any of the following proposals using I =
15% for calculating the present worth values
Propos
al
1
2
3
Initial
investment
$25.000
$30.000
$50.000
Annual cash
flow
$6.000
$9.000
$15.000
Life,
years
4
5
6
Salvage
value
$4.000
$2.500
$5.500