solve these
11.13 An engineer determined the ESL of a new $80 000 piece of equipment and recorded the calculations shown below. [Note that the num- bers are annual worth values associated with various years of retention; that is, if the equip- ment is kept for, say, 3 years, the AW (years I through 3) of the first cost is $32,169, the AW of the operating cost is $51,000, and the AW of the salvage value is $6042 ] The engineer forgot to enter the AW of the salvage value for 2 years of retention. From the information available, deter- mine the following: [a) The interest rate used in the ESL calculations. (b) The salvage value after 2 years, if the total AW of the equipment in year 2 was $78,762 Use the interest rate determined in part (a). Years AW of AW of AW of Retained First Cost, $ Operating Cost, $ Salvage Value, $ -45 000 -46 095 -46 000 7 -32,167 6042 11.14 A large, standby electricity generator in a hospital operating room has a first cost of $70,000 and may be used for a maximum of & years. Its salvage value, which decreases by 13%% per year, is de- scribed by the equation S = 70,000(1 - 0.15)- where a is the number of years after purchase. The operating cost of the generator will be constant at $75,000 per year At an interest rate of 12%% per year, what are the economic service life and the associated AW value?An industrial engineer at a fiber-optic manufacture ing company is considering two robots to reduce costs in a production line. Robot X will have a first cost of $82,000, an annus and opera- tion (M.&Oj cost of $30,000, and salvage values of $50,000, $42,000, and $35,000 after 1, 2, and years, respectively. Robot Y will have a first cost of $97,000, an annual M&( cost of $27,000, and salvage values of $60,000, $51,000, and $42,000 after 1, 2, and 3 years, respectively. Which robot should be selected if a 2-year study period is speci- fied at an interest rate of 15% per year and replace- ment after I ye an option? A 3-year-old machine purchased for $140,000 is not able to meet today's market demands. The machine can be upgraded wow for $70,000 or sold to a sub- contracting company for $40,000. The current ma- chine will have an annual operating cost of $85,000 per year and a $30,000 salvage value in 3 years. If upgraded, the presently owned machine will be re- taimed for only 3 more years, then replaced with a machine to be used in the man facture of several other product lines. Th which will serve the company now and for at least years, will cost $220,000. Its salvage value will be $50 000 for years I through 4: $20,000 after 5 years; and $10,000 thereafter. It will have an estimated op- erating cost of $65,000 per year. You want to per- form an economic analysis at 15%% per year using a 3-year planning horizon. a) Should the company replace the presently owned machine now, or do it 3 years from now? [bj Compare the capital recovery requirements for the replacement machine (challenger) over the study period and an expected life of 8 years.\f
