BV2c $70). 52076 2. Pace Corporation in Cookeville, Tennessee bought production
ID: 1214290 • Letter: B
Question
BV2c $70). 52076 2. Pace Corporation in Cookeville, Tennessee bought production equipment 2 years ago for $38,000. The equipment was expected to last for 5 years and the salvage value was estimated to be $4,000 at the end of its useful life. Unfortunately the equipment did not perform satisfactorily and the company spent $15,000 a year ago. It is recommended by the plant engineer that the equipment be either upgraded now for another $12,000 or replaced with equipment now. If the equipment is replaced now, it can be sold for $8,000. In conducting a replacement analysis, the cost of the defender to be used is equal to: (10 pts, no partial credit) A. $38,000 B. $35,000 C. $27,000 D. $8,000 3. An injection-molding machine has a first cost of SI,050,000 and a salvage value of $225,000 in any year. The maintenance and operating cost is $235,000 with an annual gradient of $75,000. The MARR is 10%. What is the most economic life of this machine? (10 pts, no partial credit) A. 3 years B. 5 years C. 7 years D. 8 years 4. If the real interest rate is 7% and the inflation rate is 5%, what is the market interest rate? (10 pts, no partial credit) A. 12.35% B. 11.65% C. 16.63% D. 13.84% Assume that over the past eight years, prices have increased by a total of 65% what is the annual inflation rate? The inflation rate is compounded annually. Compute your ans 5. wer to the nearest 0.01%. (10 pts, no partial credit) A. 4.45% B. 6.46% C. 5.70% D. 3.92% 2500 Determine the unknown x from the cash flow diagram shown for i-10%. (10 pts, no partial credit) 6. 1300 B. $4,503 C. $3,291 D. $2,507 A. $3,823Explanation / Answer
2. First Cost of defender is Market Value = 8000
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