Quiz11 sec2 solution

# Quiz11 sec2 solution - be reconditioned now for \$35,000. If...

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IE 343 Spring 2010 Name: Section 1, Quiz 11 (last) (first) Closed book, closed notes. No calculators. 1. CAT is thinking of replacing one of its forklifts. This forklift was bought for \$4,800 3 years ago and has a present MV of \$500. The new forklift would cost \$6,500 to purchase. It has an economic life of 4 years, at the end of which it can be sold for \$800. Annual expenses amount to \$1,200 for this forklift. Write an expression for the minimum EUAC of the challenger. MARR is 8% PW 4 = 6,500 – 800(P/F,8%,4) + 1,200(P/A,8%,4) EUAC = PW 4 (A/P,8%,4) = 6,500(A/P,8%,4) – 800(A/F,8%,4)+ 1,200 2. The US Rail company bought a railroad tank car for \$60,000 8 years ago. It needs to
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Unformatted text preview: be reconditioned now for \$35,000. If it is reconditioned, it will last for a further 10 years, and can be sold for \$7,500. Annual maintenance for the tank car is \$5,000. The tank car could be sold for \$10,000 now though, and a new tank car could be purchased for \$85,000. This car will have annual expenses of \$2,800. Write an expression for the EUAC of the defender . MARR is 8% (1) Annual expense = \$5,000 (2) Capital recovery cost = \$10,000(A/P,8%,10) \$7,500(A/F,8%,10) (3) Recondition cost = \$35,000(A/P,8%,10) EUAC = (1) + (2) + (3) = \$5,000 + \$45,000(A/P,8%,10) \$7,500(A/F,8%,10) Please write any concerns/comments on the back....
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