Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Rams Engineering firm has been invited to participate in remodeling Hayward Hall at Philadelphia University and need to acquire a crane with a cost
The Rams Engineering firm has been invited to participate in remodeling Hayward Hall at Philadelphia University and need to acquire a crane with a cost of $250,000. The cost of transporting the crane to Phil au is $75,000. The project is expected to last four years and at that time the cranes will be sold at an expected salvage value of $100,000. The crane has MACRS-GDS 5-year property class. The engineering firm will finance the crane with a loan to be paid with four equal principal payments plus interest every year. The engineering firm will receive for their services a payment of $200,000 the first year increasing 3% per year thereafter. Their O&M costs are expected to be $50,000 the first year increasing by $10,000 every year. The payment of $200,000 in the first years is subject to meet deadlines and can vary + - 30% depending on the progress of the project. Therefore, the O&M will also be affected by progress of the project within a range +-30%. Perform an ATCF sensitivity analysis to determine if the project is economically feasible for the engineering firm. The firm MARR is 10% and tax is 35%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started