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9-2. A company that sells has proposed to a small public utility company that it purchase a smallelectronics computer for 1, 000,000 to replace ten calculating machines and their operators. Anannual service maintenance contract for the computer will be provided at accost of 100, 000 per year.One operator will be required at a salary of 96, 000 per year and one programmer at a salary of 144,000. The estimated economical life of the computer is 10 years.The calculating machines costs 7, 000 each when new, 5 years ago, and presently can be soldfor 2, 000 each. They have an estimated life of 8 years and an expected ultimate trade in value of1, 000 each. Each calculating machine operator receives 84, 000 per year. Fringe Benefits for alllabour cost 8% of annual salary. Annual maintenance cost on the calculating machine has been 500each. Taxes and insurance on all equipment is 2% of the first cost per year.If capital costs the company about 25%, would you recommend the computer installation?
5/19/2018engineeringeconomybyhipolitosta.maria3rdeditionsolutionmanual.pd...9-3.It is desired to determine the resent economic Value of an old machine by considering of how itcompares with the best modern machine that could replace it. The old machine is expected torequire out of pocket cost of 85, 000 each year for 4 years and then be scared for 5, 000 residualvalue. The new machine requires an investment of 40, 000 and would have out of the pocketcosts of 79, 000 a year for 8 years and the zero salvage value. Invested capital should earn aminimum return of 15% before taxes. Determine the resent value of an old machine