6.2BRT Bartolini is considering buying a new automatic parcel sorter. And it is
ID: 1172593 • Letter: 6
Question
6.2BRT Bartolini is considering buying a new automatic parcel sorter. And it is required to set a replacement policy for the sorter. This sorter has an initial cost of 24K. The operating and maintenance costs are given in the following table: EOY O&M; Costs 2 3 4 $10,000 $11,500 $14,000 $16,600 Assuming discrete cash flows and a MARR of 15%, answer the following questions: a) What is the EUAC of the Capital Recovery? Fill the following table points] EOY | Initial Cost (A/P, 15%, j) | CR EUAC 2 4 b) What is the total EUAC? Fill the following table. [1 point] Hint: The O&M; EUAC is given for each year. Use it directly. EOY CR O&M; EUAC Total EUAC 2 3 4 c) When should the sorter be replaced? Why? [0.5 + 0.5 point]Explanation / Answer
a)
EOY
Initial Cost
[I]
(A/P,15%,j)
[II]
CR EUAC
[I x II]
1
$ (24,000)
1.1500
$ (27,600)
2
$ (24,000)
0.6151
$ (14,762)
3
$ (24,000)
0.4380
$ (10,512)
4
$ (24,000)
0.3503
$ (8,407)
b)
EOY
CR
O & M EUAC
Total EUAC
[CR + O&M]
1
$ (27,600)
$ (10,000)
$ (37,600)
2
$ (14,762)
$ (11,500)
$ (26,262)
3
$ (10,512)
$ (14,000)
$ (24,512)
4
$ (8,407)
$ (16,600)
$ (25,007)
c) The Shorter should be replaced EOY 3 as total EUAC for year third is lowest.
**** Salvage value is considered to be zero as it is not mentioned.
EOY
Initial Cost
[I]
(A/P,15%,j)
[II]
CR EUAC
[I x II]
1
$ (24,000)
1.1500
$ (27,600)
2
$ (24,000)
0.6151
$ (14,762)
3
$ (24,000)
0.4380
$ (10,512)
4
$ (24,000)
0.3503
$ (8,407)
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