Question 1 (1 point) A commuter airline company is considering replacing one of its baggage handling machines with a newer and more efficient machine. The book value of the old machine is $50,000, and it has a useful remaining life of of five years. The salvage value of the old machine at the end of five years is zero, but the company can sell the machine now for $10,000. The new baggage handling machine will cost $120,000 and has an estimated useful life of seven years. It has an estimated salvage value of $20,000 and is expected to have a total annual savings of $25,000. The company has a MARR of 10%. Should the airline purchase the new machine? No, keep the existing machine None of the above Yes, purchase the new machine Either machine Question 2 (1 point) The company is considering replacing a broken inspection machine. They can purchase a used machine for $5000. The used machine will require an immediate $1200 overhaul to restore it to working condition. If repaired the machine can be used for another 3 years. The operating costs are estimated at $2000 during the first year, and these costs are expected to increase by $1500 per year thereafter. The value of the machine is expected to decline by 25% per year over the previous year's value (from the original $5000). At a MARR of 15%, determine the economic service life of the machine. O1 year 2 years O 3 years None of the above Question 3 (1 point) A firm owns a pressure vessel that it is contemplating replacing. The old pressure vessel has annual operating and maintenance expenses of $60,000 per year and it can be kept for five more years, at which time it will have zero salvage value. $30,000 could be obtained for the old pressure vessel if it were sold now. A new pressure vessel can be purchased for $120,000. The new pressure vessel will have a market value of $50,000 in five years and will have annual operating and maintenance expenses of $30,000 per year. Using a MARR of 20% per year, determine whether or not the old pressure vessel should be replaced. Use a study period of five years. Defender Challenger Either Not enough information to decide Question 1 (1 point) A commuter airline company is considering replacing one of its baggage handling machines with a newer and more efficient machine. The book value of the old machine is $50,000, and it has a useful remaining life of of five years. The salvage value of the old machine at the end of five years is zero, but the company can sell the machine now for $10,000. The new baggage handling machine will cost $120,000 and has an estimated useful life of seven years. It has an estimated salvage value of $20,000 and is expected to have a total annual savings of $25,000. The company has a MARR of 10%. Should the airline purchase the new machine? No, keep the existing machine None of the above Yes, purchase the new machine Either machine Question 2 (1 point) The company is considering replacing a broken inspection machine. They can purchase a used machine for $5000. The used machine will require an immediate $1200 overhaul to restore it to working condition. If repaired the machine can be used for another 3 years. The operating costs are estimated at $2000 during the first year, and these costs are expected to increase by $1500 per year thereafter. The value of the machine is expected to decline by 25% per year over the previous year's value (from the original $5000). At a MARR of 15%, determine the economic service life of the machine. O1 year 2 years O 3 years None of the above Question 3 (1 point) A firm owns a pressure vessel that it is contemplating replacing. The old pressure vessel has annual operating and maintenance expenses of $60,000 per year and it can be kept for five more years, at which time it will have zero salvage value. $30,000 could be obtained for the old pressure vessel if it were sold now. A new pressure vessel can be purchased for $120,000. The new pressure vessel will have a market value of $50,000 in five years and will have annual operating and maintenance expenses of $30,000 per year. Using a MARR of 20% per year, determine whether or not the old pressure vessel should be replaced. Use a study period of five years. Defender Challenger Either Not enough information to decide
