Answer with clear workings please
6. A particular unit of production equipment has been used by a firm for a period of time sufficient to establish very accurate estimates of its operating and maintenance costs. Replacements can be expected to have identical cash flow profiles in successive life cycles if constant worth dollar estimates are used (if EUAC approach is used). The appropriate discount rate is 15%. O&M costs for a unit of equipment in its tth year of service denoted by Ct, are as follows: 1 $6,000 6 $15,000 $7,500 $17,250 3 $9,150 8 $19,650 4 $10,950 9 $22,200 5 $12,900 10 $24,900 Each unit of equipment costs $45,000 initially. Because of this special design, the unit of equipment cannot be disposed of at a positive salvage value following its purchase; hence, a zero salvage value exists, regardless of the replacement interval used. (Total points: 9) a. Determine the optimum replacement interval assuming an infinite planning horizon (maximum feasible interval = 10 years). Show all the EUAC calculation steps for at least one "n" and fill out the table below for different n's up to 10 years to get credit (do NOT just give the final answer and a justification). Hint: No need for capitalized worth analysis (do not overthink). In this case, infinite planning horizon just means you may assume that your planning horizon will be multiple of ORI. (3 points) In EUAC 1 2 8 9 10 b. Determine the optimum replacement interval assuming a finite planning horizon of 15 years, with C++1 = C+ + $1,500 + $150(t-1) for t = 10, 11, ... Show all the EUAC calculation steps for at least one "n" and fill out the tables below for different n's up to 15 years and for all possible sequences to get credit (do NOT just give the final answer and a justification). (6 points) n EUAC 12 13 14 15 Hint: you may not need all the columns and rows of the table below. Sequence PW Sequence PW Sequence PW 6. A particular unit of production equipment has been used by a firm for a period of time sufficient to establish very accurate estimates of its operating and maintenance costs. Replacements can be expected to have identical cash flow profiles in successive life cycles if constant worth dollar estimates are used (if EUAC approach is used). The appropriate discount rate is 15%. O&M costs for a unit of equipment in its tth year of service denoted by Ct, are as follows: 1 $6,000 6 $15,000 $7,500 $17,250 3 $9,150 8 $19,650 4 $10,950 9 $22,200 5 $12,900 10 $24,900 Each unit of equipment costs $45,000 initially. Because of this special design, the unit of equipment cannot be disposed of at a positive salvage value following its purchase; hence, a zero salvage value exists, regardless of the replacement interval used. (Total points: 9) a. Determine the optimum replacement interval assuming an infinite planning horizon (maximum feasible interval = 10 years). Show all the EUAC calculation steps for at least one "n" and fill out the table below for different n's up to 10 years to get credit (do NOT just give the final answer and a justification). Hint: No need for capitalized worth analysis (do not overthink). In this case, infinite planning horizon just means you may assume that your planning horizon will be multiple of ORI. (3 points) In EUAC 1 2 8 9 10 b. Determine the optimum replacement interval assuming a finite planning horizon of 15 years, with C++1 = C+ + $1,500 + $150(t-1) for t = 10, 11, ... Show all the EUAC calculation steps for at least one "n" and fill out the tables below for different n's up to 15 years and for all possible sequences to get credit (do NOT just give the final answer and a justification). (6 points) n EUAC 12 13 14 15 Hint: you may not need all the columns and rows of the table below. Sequence PW Sequence PW Sequence PW
