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Showing posts with the label 2017

2017//4(a)//Engineering Eco//KU

Casio Systems is purchasing a new bar code scanning device for its service center in San Francisco. The table that follows lists the relevant cost items for this purchase. The operating expenses for the new system are $10,000 per year, and the useful life of the system is expected to be five years. The salvage value for depreciation purpose is equal to 25% of the hardware cost. i. What is the book value of the device at the end of year three if the SL depreciation method is used? ii. Suppose that after depreciating the device for two years with the SL method, the firm decides to switch to the double declining balance depreciation method for the remainder of the device’s life (the remaining three years). What is the device’s BV at the end of four years?

2017//3(b)//Engineering Eco//KU

Two mutually exclusive alternatives are being considered for the environmental protection equipment at a petroleum refinery. One of these alternatives must be selected. The estimated cash flows for each alternative are as follows: i. Which environmental protection equipment alternative should be selected? The firm’s MARR is 20% per year. ii. Assume the study period is shortened to five years. The market value of Alternative B after five years is estimated to be $15,000. Which alternative would you recommend?

2017//3(a)//Engineering Eco//KU

A remotely situated fuel cell has an installed cost of $2,000 and will reduce existing surveillance expenses by $350 per year for eight years. The border security agency’s MARR is 10% per year. i. What is the minimum salvage (market) value after eight years that makes the fuel cell worth purchasing? ii. What is the fuel cell’s IRR if the salvage value is negligible?

2017//2(c)//Engineering Eco//KU

An apartment complex wishes to establish a fund at the end of 2004 that, by the end of the year 2021, will grow to an amount large enough to place new roofs on its 39 apartment units. Each new roof is estimated to cost $2,500 in 2019, at which time 13 apartments will be reroofed. In 2020, another 13 apartments will be reroofed, but the unit cost will be $2,625. The last 13 apartment will be reroofed in 2021 at a unit cost of $2,750. The annual effective interest rate that can be earned on this fund is 4%. How much money each year must be put aside (saved), starting at the end of 2005, to pay for all 39 new roofs? State any assumptions you make.

2017//2(b)//Engineering Eco//KU

A loan of $10,000 is to be repaid over a period of eight years. During the first four years, exactly half of the loan principal is to be repaid (along with accumulated compound interest) by a uniform series of payments of A1 dollar per year. The other half of the loan principal is to be repaid over four years, with accumulated interest, by a uniform series of payments of A2 dollar per year, If i=9% per year, what are A1 and A2?

2017//1(c)//Engineering Eco//KU

A plant operation has fixed cost of $2,000,000 per year, and its output capacity is 100,000 electrical appliances per year. The variable cost is $40 per unit, and the product sells for $90 per unit. i. Construct the economic breakeven chart and determine the breakeven quantity and dollar breakeven point. ii. Compare annual profit when the plant is operating at 100% capacity. Assume that the first 90% of capacity output is sold at $90 per unit and that the remaining 10% of production is sold at $70 per unit