TMI Systems, a company that customizes software for construction cost estimates, repaid a loan obtained 9 years ago at 10% per year 15 simple interest. If the amount that TMI repaid was $280,000, calculate the principal of the loan. The principal of the loan is $How much money can a production company that makes fluidized bed scrubbers spend now instead ofspending $125,000 in year 5 if 1 6 the interest rates are estimated to be 10% per year in years 1 to 3 and 17% per year in years 4 and 5? The company can spend $ E. 17 Two methods can be used to produce solar panels for electric power generation. Method 1 will have an initial cost of $740,000, an AOC of $190,000 per year, and $135,000 salvage value after its 3-year life. Method 2 will cost $870,000 with an AOC of $135,000 and a $170,000 salvage value after its 5year life. Assume your boss asked you to determine which method is better, but she wants the analysis done over a three-year planning period. You estimate the salvage value of Method 2 will be 37% higher after three years than it is after ve years. If the MARR is 14% per year, which method should the company select? The company should selec Li :1, 2: ;: :m method 2 method1 18 Old Southwest Canning Co. has determined that any one of four machines can be used in its chili-canning operation. The cost of the machines are estimated below, and all machines have a 5year life. If the minimum attractive rate of return is 25% per year, determine which machine should be selected on the basis of a rate of return analysis. Machine First Cost, $ AOC, $ 1 28,000 20,000 2 51,000 12,000 3 32,000 19,000 4 33,000 18,000 Machine (Click to select] 1ould be selected. w'NJ> A relatively small privately owned coalmining company has the sales results summarized below. Determine the annual percentage depletion for the coal mine. Assume the company's taxable income is $115,000 each year. 19 Year Sales, Tons Spot Sales Price, $/Ton 1 34,300 9.82 2 50,100 1215 3 71,900 11423 0 Gross Depletion 501' 0f the Allowed Year taxable . Income, 3; amount Depletion amount 1 I I :I E | I I 2 I I :I E | I I 3 I I :I E | I I Perform a present worth (PW)-based evaluation of the two alternatives below using a spreadsheet. The after-tax minimum acceptable 20 rate of return (MARR) is 8% per year, Modified Accelerated Cost Recovery System (MACRS) depreciation applies, and Te = 40%. The (GI - OE) estimate is made for the first 3 years; it is zero in year 4 when each asset is sold. Alternative X Y First Cost, $ -8,000 -13,000 Salvage Value, Year 4, $ O 2,000 GI-OE, $ per Year 3,500 5,000 Recovery Period, Years 3 3 The PW for alternative X is determined to be $ The PW for alternative Y is determined to be $ Alternative V (Click to select) selected. Y X