PS 15 - Replacement Analysis - Co-terminated

PS 15 - Replacement Analysis - Co-terminated - evaluation...

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IE 150 Problem Set 15 Replacement Analysis Co-terminated Instructions:  Write/Type/Print your answers on yellow pad or bond paper (NO A4’s). Use a different sheet per  problem.  Use phrases  to describe what you are doing. Do not present it as just a series of equations and  numbers.  Label each step. Ex: “Step 1: Set-up the Total Revenue Equation”, “Step 4: Solve for the NPV”.  Box the final answers.  Use clear formatting: Indent at each step. Show your answers in just 1 column. (The problem set  will be read from top to bottom, and not top bottom diagonal right bottom.) Problem 1:  A taxi operator manages the assignment of each taxi to taxi-drivers. It is his prime interest that the cost of  operating each taxi is kept to a minimum. In 2005 he purchased 20 taxis all of which are now under 
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Unformatted text preview: evaluation whether it should be replaced or not. The market value of the 2005 taxis is currently at PhP 300,000. The decreasing MV and increasing annual expenses of the 2005 taxis is summarized in the table below. EOY MV Ann.Exp 1 250,000 45,000 2 200,000 50,000 3 150,000 70,000 4 100,000 80,000 However, purchasing a brand new taxi for 500,000 would yield the following expenses. EOY MV Ann.Exp 1 450,000 2,000 2 400,000 4,000 3 300,000 6,000 4 200,000 8,000 5 100,000 10,000 When should the current taxis be replaced? a) If the study period is only 4 years. (Co-terminated) Make sure to show the tables for the defender and the challenger. (MARR = 10%)...
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This note was uploaded on 10/05/2011 for the course IE 150 taught by Professor J3patino during the Spring '11 term at University of the Philippines Diliman.

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