Two vehicle-sensor devices are being considered for grand parkway toll road. Dev
ID: 2454016 • Letter: T
Question
Two vehicle-sensor devices are being considered for grand parkway toll road. Device A cost $32000 for installation and has efficiency rating of 78%, requires 28 kW power (output), incurs a user cost of $0.24 per vehicle, and has a life of 10 years. Device B costs $45000 to install, has an efficiency rating of 90 %, requires 34 kW power (output), has user cost of $0.22 per vehicle, and has a life of 15 years. Annual maintenance costs are $75 and $100, respectively. MARR=10 % per year. How many vehicles must use the toll road to justify Device B when electricity costs $0.08/kwh? A gas turbine purchased two years ago with a first cost of $360,000 may be used for a maximum of 6 years from now. Its salvage value which decreases by 15% per year, is described by the equation S = MV (1 - 0.15)^n, while its maintenance and operating cost which increases by 2% from now, can also be described by this equation MO= 90000( 1-0.02)^n. Thus, n is the number of years after purchase, MV is the Market Value at year n, and MO is the maintenance and operating cost. At an interest rate of 12% per year, what is the: Dollar amount of MV and MO at year 0 Economic service life (ESL) of the machine? Associated AW value for the ESL?Explanation / Answer
Question 1. Cost: Device A Device B Power Required (Kw) 28 34 Efficiency 78% 90% Use of Electricity (required/eficiency) 35.90 37.78 Power cost 2.87 3.02 User Cost 0.24 0.22 Total Variable Cost 3.11 3.24 Different in Variable cost = 3.24 - 3.11 = 0.13 Change in Fixed Cost= 45000-32000 = 13000 Hence No of Car to break even = 13000/0.13 = 99673 cars Answer: 99,673 cars. Question 2a. MV at Year zero = 360,000 x (1-0.15)^2 = 260,100 Question 2b. Market OM Total Year Value Cost Cost 1 306000.00 91800.00 397800.00 2 260100.00 93636.00 353736.00 3 221085.00 95508.72 316593.72 4 187922.25 97418.89 285341.14 5 159733.91 99367.27 259101.18 6 135773.83 101354.62 237128.44 7 115407.75 103381.71 218789.46 8 98096.59 105449.34 203545.93 9 83382.10 107558.33 190940.43 10 70874.79 109709.50 180584.28 11 60243.57 111903.69 172147.26 12 51207.03 114141.76 165348.79 13 43525.98 116424.60 159950.57 14 36997.08 118753.09 155750.17 15 31447.52 121128.15 152575.67 16 26730.39 123550.71 150281.10 17 22720.83 126021.73 148742.56 18 19312.71 128542.16 147854.87 19 16415.80 131113.01 147528.81 20 13953.43 133735.27 147688.70 21 11860.42 136409.97 148270.39 22 10081.35 139138.17 149219.52 23 8569.15 141920.93 150490.08 24 7283.78 144759.35 152043.13 25 6191.21 147654.54 153845.75 Total Cost is lowest at year 19. there after cost is increasing. So Economic Service Life = 19 year. Question 2c. Associated Value is $147,528.81
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