IE343_HW12_Solutions

Of capital expenses marginal cost euac 10000 4000

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Unformatted text preview: lue Cost of Capital Expenses Marginal Cost EUAC $10,000 $4,000 $4,000 $4,000 $3,500 $2,500 $2,100 $1,700 $18,500 $21,000 $23,500 $26,000 $32,000 $27,500 $29,600 $31,700 $32,000 $29,857 $29,779 $30,193 Defender EOY MV 0 1 2 3 4 $35,000 $25,000 $21,000 $17,000 $13,000 The economic life of challenger is 2 years, and the corresponding EUAC is $27,761. This is smaller than the marginal cost of keeping the Defender for one more year which is $32,000. Therefore, the defender should be replaced immediately. Homework#12Solutions (10 points) P r ob l e m 5 T e x t b oo k p r ob l e m 9-15 We want to determine the best time to abandon the centrifuge Year Present Worth  1  2 3   4 5  PW (10%) reaches a maximum at 3 years. Therefore, the centrifuge should be retained for three years before abandonment. Homework#12Solutions (20 points) P r ob l e m 6 T e x t b oo k p r ob l e m 9-16 EOY 0 MV L oss in MV C os t of C apit al =B2B3 =B3B4 =B4B5 =B5B6 =B6B7 =B7B8 =B8B9 =B9B10 =B2* 0.07 =B3* 0.07 =B4* 0.07 =B5* 0.07 =B6* 0.07 =B7* 0.07 =B8* 0.07 =B9* 0.07 A p p r ox. A f te r - T a x T ota l ( M a r gi na l) c os t M A C RS B V I n t e r est o n T a x C r edit A d j ust e d A f t e r -t a x T ota l( M a r g i n a l ) C os t 8000 A nn . E xp. 0...
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