# Chapter 6 Quiz.pdf - Assignment Print View Score 1 80/100...

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2/2/2020 Assignment Print View 1. Award: 10 out of 10.00 points A delivery car had a first cost of \$26,000, an annual operating cost of \$16,000, and an estimated \$4000 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 2 years and must be sold now as a used vehicle. At an interest rate of 13% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if it had been kept for its full life cycle? Score: 80/100 Points 80 %
1/10 References Worksheet Difficulty: Medium Chapter: 06 Annual Worth Analysis Section: 06.01 Advantages and Uses of Annual Worth Analysis A delivery car had a first cost of \$26,000, an annual operating cost of \$16,000, and an estimated \$4000 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 2 years and must be sold now as a used vehicle. At an interest rate of 13% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if it had been kept for its full life cycle? The market value of the used vehicle is determined to be \$ . Explanation: AW 4 = -\$26,000 A P , 13%, 6 - \$16,000 + \$4,000 A F , 13%, 6 AW 4 = -\$26,000 × (0.25) - \$16,000 + \$4,000(0.12) AW 4 = \$-22,023 \$-22,023 = -\$26,000 A P , 13%, 2 - \$16,000 + S A F , 13%, 2 \$-22,023 = -\$26,000 × (0.599) - \$16,000 + S(0.469) S = \$20,370 20,370 ± 2% ( ) ( ) ( ) ( )
2/2/2020 Assignment Print View 2/10 2. Award: 10 out of 10.00 points White Oaks Properties builds strip shopping centers and small malls. The company plans to replace its refrigeration, cooking, and HVAC equipment with newer models in one entire center built 9 years ago. 9 years ago, the original purchase price of the equipment was \$775,000 and the operating cost has averaged \$220,000 per year. Determine the equivalent annual cost of the equipment if the company can now sell it for \$234,000. The company’s MARR is 21% per year. The equivalent annual cost of the equipment is determined to be \$ -407,690 . References Worksheet Difficulty: Medium Chapter: 06 Annual Worth Analysis Section: 06.01 Advantages and Uses of Annual Worth Analysis White Oaks Properties builds strip shopping centers and small malls. The company plans to replace its refrigeration, cooking, and HVAC equipment with newer models in one entire center built 9 years ago. 9 years ago, the original purchase price of the equipment was \$775,000 and the operating cost has averaged \$220,000 per year. Determine the equivalent annual cost of the equipment if the company can now sell it for \$234,000. The company’s MARR is 21% per year. The equivalent annual cost of the equipment is determined to be \$ . Explanation: AW = -\$775,000 A P , 21%, 9 - \$220,000 + \$234,000 A F , 21%, 9 AW = -\$775,000 × (0.256) - \$220,000 + \$234,000 × (0.046) AW = \$-407,665 -407,665 ± 2% ( ) ( )
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