discussion7_ise460_october_10th

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LOGO www.nordr Welcome to ISE-460 Class Discussion 7 October 12th, 2007 TA: Paul
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  TA: Bill Jia / Fall 2006 Function NPV     NPV ( rate , value1 ,value2, . ..) (1)   Rate:  interest for each payment period    (2)   Value1, value2, . ..  :  From t=1~29 (t=0 is not included) Don’t forget to add value @ t=0 to get NPV !! occur at the end of each period.  the order of value1, value2, . .. interpret the order of  cash flows. Be sure to enter your payment in the  correct sequence.   TA: Paul 2007 Fall
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  TA: Bill Jia / Fall 2006 Problem #1 Covington Corporation purchased a vibratory finishing machine  for $19,000 in year 0. The useful life of the machine is 10 years,  at the end of which the machine is estimated to have a salvage  value of zero. The machine is capable of making 700,000 parts  per year. The revenue per unit part is $0.0095. The annual  operating and maintenance expenses are estimated to be $500.  If Covington’s MARR is 25%, how many years will it take before  this machine becomes profitable? TA: Paul 2007 Fall
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  TA: Bill Jia / Fall 2006 Problem  #1 TA: Paul 2007 Fall 2 4 10 0 Saving 700,000*0.0095 expense 500 Net salvage value: 0 1 Investment: 19,000     How many years will it take before this machine becomes profitable? Try different “n”,  until NPW>0 PV=19,000;  FV (salvage value)=0; PMT=? (700,000*0.0095-500);  i=25% Another way: find  NPER(…),  use NPER or the closest integer which is larger
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  TA: Bill Jia / Fall 2006 Problem #2 An electronics company purchased a soldering  machine for $300,000. Its life is 5 years and  salvage value is $80,000. If they produce one  million printed circuit boards a year, how much will  this purchase add to the cost of each board?  (ignore depreciation and taxes) (Use an interest  rate of 15%) TA: Paul 2007 Fall
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This note was uploaded on 01/20/2009 for the course ISE 460 taught by Professor Bottlik during the Fall '06 term at USC.

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discussion7_ise460_october_10th - LOGO Welcome to ISE-460...

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