different vendors. Vendor A lists a first cost of $5,000 with annual maintenance costs of $500. At the end of its 10 year life, the instrument will have a salvage value of $600. The instrument sold by Vendor B has an initial cost of $10,000, annual maintenance costs of $200, and a salvage value of $1,000 after its 10 year useful life. MARR is 8%. a) Calculate the NPV (PW) for both alternatives. b) Calculate the EUAC for both alternatives c) Which alternative should be chosen? Why? A luxury apartment building project requires an investment of $1,250,000. The building has 50 units. We expect the maintenance cost for the apartment building to be $150,000 in the first year, $200,000 in the second year, and will continue to increase by $50,000 per year in subsequent years. The cost to hire a manager for the building is estimated to be $50,000 per year. After five years of operation the apartment building can be sold for $750,000. What is the annual and monthly rent per apartment unit that will provide a return on investment of 15%? Assume the building will remain fully occupied during the five years. A lift station sewage pump initially costs $20,000. Annual maintenance costs are $300. The pump salvage value is 10 percent ofthe initial cost in 20 years. Using 4% interest, the annual cost of the pump is most nearly: 6. The Project Manager of a Technology-based company needs to decide what project to take on next. The manager has narrowed the decision down to two plans. Description Plan A Plan B First Cost 37,000 .000 Annual Revenue ,000 5,500 Annual Expense 16,000 1,000 Salvage Value 2,50 3,000 Life 10 10 MARR 15% 15% a) Calculate the PW for both the Alpha and the Beta companies. b) Calculate the AW for both the Alpha and the Beta companies. c) Calculate the FW for both the Alpha and the Beta companies d) Which Plan should be undertaken? Why 7. How much do you need to deposit today (P) to withdraw $25,000 at n =1, $3,000 at n = 2, and $5,000 at n =4, if your account earns 10% annual interest? $25,000 $3,000 $5,000 O 1 2 P9. 10. 11. 12. How many years will it take for a uniform annual deposit of size A to have the same value as a single deposit now that is 4 times the size of one annual deposit? Assume that i = 10%. A machine is purchased for $1000 and has a useful life of 12 years. At the end of 12 years, the salvage value is $130. By straight-line depreciation, what is the book value of the machine at the end of 8 years? (A) $290 (B) $330 (C) 5420 (D) 5580 A factory is running at 80% efficiency with a fixed cost of $3000, a variable cost per unit of $5, a selling price per unit of $16, and a production capacity of 5000 units. What is the current profit of the factory if all products manufactured are sold? A company uses a variable speed honing machine to increase the smoothness of the inside walls of hydraulic jacks. The hone uses acid-dipped "brushes" to perform this operation. Increasing the speed of the machine results in faster operation, but reduces brush life. A single "brush" costs $90.00 and can be refurbished several times before its useful life is over. {The number of refurbishings depends on the honing speed.) Each refurbishing costs $30.00. Assume a refurbished brush can smooth the same amount as a new brush, and that when purchased a new brush is ready to use. The operating cost for the hone and operator is $70.00/hr. Below is the data for operating the hone at 3 different speeds. The time required for changing brushes is incorporated into the honing rates below. Which honing speed is most economical? (HINT: nd the cost perjack, not per hone or per cycle!!) ff ofjacks polished # of times Honing Speed (rpm) Hone Rate (jacks/hr) until brush needs refurbishing is refurbished possible