A manufacturer purchased $15,000 worth of equipment with a useful life of six ye

Question

A manufacturer purchased $15,000 worth of equipment with a useful life of six years and a $2000 salvage value at the end of the six years. Assuming a 12% interest rate, the equivalent annual cost is nearest to. $1,500 $3,500 $2,500 $4,500 Determine the present and future worth of the following cash flows, based on an interest rate at 12% per year compounded annually. End of Year 0 1 2 3 4 Cash Flow, $1000 2 5 4 1 8 You are considering making an $80,000 investment in a processs improvement project. Revenues are expected to grow from $50,000 in year 1 by $30,000 each year for the next four years. ($50,000 first year, $80,000 second year, $110,000 thirdyear and so forth) while costs are expected to increase by $20,000 in year 1 and $10,000 each year. If there is no salvage value at the end of five years, what is the annual equivalent worth of the project assuming an MARR of 12% Two alternatives are being considered The benefit-cost ratio of the difference between alternatives, based on a 12% interest rate, is closest to 0.60 1.00 0.80 1.20 A city has retained your firm to do a benefit-cost analysis of the following project: Project cost: $60,000,000, Gross Income: $20,000,000, Operating costs: $5,500,000 per year. Salvage value after 10 years: None. The project life is 10 years. Use 8% interest in the analysis. The computed benefit-cost ratio is closest to 0.80 1.50 1.00 1.60

Explanation / Answer

1)annual cost=[(15000*12/100)+15000-2000]/6=2466.7=ans b 2)present value= $15450 4)ans-b 5)ans-c

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