An equipment costing $57,500 is being considered for a production process at Dewey Chemicals. The expected benefits per year is $4,500 and estimated salvage value is $10,000. Determine the rate of return the company can get in this equipment proposal. Equipment life = 15 years
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An equipment costing $57,500 is being considered for a production process at Dewey Chemicals. The expected benefits per year is $4,500 and estimated salvage value is $10,000. Determine the
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- Precision Engineering Factory consumes 50,000 units of a component per year. The ordering, receiving and handling costs are Rs 3 per order while the trucking costs are Rs 12 per order. Further details are as follows: deterioration and obsolescence cost Rs 0.004 per unit per year; interest cost Re 0.06 per unit per year; storage cost Rs 1,000 per year for 50,000 units. Calculate the economic order quality.An oil company plans to purchase a piece of vacant land on the corner of two busy streets for $50,000. On properties of this type, the company installs businesses of three different types. Each has an estimated useful life of 15 years. The salvage land for each is estimated to be the $50,000 land cost. Cost* $ 83,000 Type of Business Conventional gas station Add automatic carwash Add quick carwash 195,000 115,000 *Improvements cost does not include $50,000 for the land. Plan A B с Net Annual Income $26,500 39,750 31,200 (a) Construct a choice table for interest rates from 0% to 100%. (b) If the oil company expects a 10% rate of return on its investments, which plan (if any) should be selected?An oil company plans to purchase a piece of vacant land at the corner of two busy streets for $50,000. On properties of this type, the company installs businesses of three different types. Each has an estimated useful life of 15 years. The salvage value for each is estimated to be the $50,000 land cost. Plan Cost (in addition to land cost) Type of business A $ 83,000 Conventional gas station B $ 195,000 Add automatic car wash C $ 115,000 Add quick car wash If the oil company expects a 10% rate of return on its investments, which plan (if any) should be selected? Use incremental analysis, before tax.
- Product A currently sells for $12 per unit. The variable cost is $4 per unit and 10,000 units are sold annually and a profit of $30,000 is realized yearly. A new design of this product will increase the variable cost by 20% and fixed cost by 10% but sales will increase to 12,000 units per year. At what selling price do the break even occurs for the new design?George has just finished the cost analysis of a brass pump with and without an interior coating. The brass pump will last 3 years, but if an interior coating is applied, less energy will be needed for pumping. The interior coating costs $300, and the energy savings is $120 per year. George claims that the coating will save $60. Is George's work correct? If not, what has George done wrong?A diesel engine uses a Type A filter and high-grade lubricating oil costing $5.50 per liter. With this filter, the oil and filter have to be changed every 500 hours of operation, and 5 liters of oil have to be added every 100 hours. This filter cost $148 a piece.Eighty liters of oil fill the engine. Another type, filter B, costing $120 may be used with a lower grade oil costing $4.80 per liter. However, if this filter is used, the oil andfilter have to be changed every 300 hours, and 10 liters are added after every 150 hours the engine is used. Which type of filter and oil would you recommend? Kindly show your complete solutions. Thank you
- Help....... Solve Write Company has a maximum capacity of 200,000 units per year. Variable manufacturing costs are $12 per unit. Fixed overhead is $600,000 per year. Variable selling and administrative costs are $5 per unit, and fixed selling and administrative costs are $300,000 per year. The current sales price is $23 per unit. A. What is the breakeven point in (a) sales units and (b) sales dollars? B. How many units must the Write Company sells to earn a profit of $240,000 per year?Oregon Ducks, Inc. is considering buying licenses for 12 megahertz of wireless spectrum in the 700 MHz range, which is suitable for delivering television to mobile phones. The 700 MHz signals can travel long distances and more easily penetrate walls and other obstacles. The acquisition cost is $300 million. In addition, because networks that operate in the 700 MHz range are less expensive to build than those in other portions of the spectrum, Ducks estimates annual costs of $24 million over the next 9 years and no salvage value. During the same period, the company expects to generate annual revenue of $40 million by offering television and video to mobile-phone users. Calculate the net present worth of this investment if the company's minimum attractive rate of return (discount rate) is 13% per year.ENGINEERING ECONOMY RATE WILL BE GIVEN. WRITE THE COMPLETE SOLUTIONS/EXPLANATION LEGIBLY OR TYPEWRITTEN. GIVE STRAIGHT TO THE POINT EXPLANATION. Two alternative designs are under consideration for a tapered fastening pin. The fastening pins are sold for $0.70 each. Either design will serve equally well and will involve the same material and manufacturing cost except for the lathe and drill operations. Design A will require 12 hours of lathe time and 5 hours of drill time per 1,000 units. Design B will require 7 hours of lathe time and 8 hours of drill time per 1,000 units. The variable operating cost of the lathe, including labor, is $18.60 per hour. The variable operating cost of the drill, including labor, is $16.90 per hour. Finally, there is a sunk cost of $5,000 for Design A and $9,000 for Design B due to obsolete tooling. a. Which design should be adopted if 125,000 units are sold each year?b. What is the annual saving over the other design?
- ! Required information An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $40,000, an annual operating cost (AOC) of $12,000, and a service life of 2 years. Method B will cost $70,000 to buy and will have an AOC of $6,000 over its 4-year service life. Method C costs $125,000 initially with an AOC of $3,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 7% of its first cost. Perform a present worth analysis to select the method at /= 12% per year. The present worth of method A is $ The present worth of method B is $ The present worth of method C is $ ✓is selected. Method CWrite Company has a maximum capacity of 200,000 units per year. Variable manufacturing costs are $12 per unit. Fixed overhead is $600,000 per year. Variable selling and administrative costs are $5 per unit, and fixed selling and administrative costs are $300,000 per year. The current sales price is $23 per unit. A. What is the breakeven point in (a) sales units and (b) sales dollars? B. How many units must the Write Company sells to earn a profit of $240,000 per year?Steel drums manufacturer incurs a yearly operating cost of P 200,000. Each drum manufactured cost P 160 and sells for P 300. A machine use for the production has a first cost of P 20,000 and a salvage value of P 2,000 after producing 1,000 units. What is the break even number of units per year?