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https:// www.mathxl.co m/Student/Player Test.aspx?testld-101699041¢erwin; yes oguz karvan 6/18/15 8:27 AM Test: Test 2 Overview This Q 12 pts Th Test 100 pts 02:58:48 A high-pressure pump at a methane gas (biofuel) plant in Memphis costs $30,000 for installation and has an estimated life of 12 years. By the addition of a specialized piece of auxiliary equipment, an annual savings of $400 in operating expense for the pump can be realized, and the estimated life of the pump can be doubled to 24 years. The salvage (market) value of either alternative is negligible at any time. If the MARR is 5% per year, what present expenditure for the auxiliary equipment can plant managers justify spending? More Info Click the icon to view the interest and annuity table for discrete compounding when i 5% per year. Discrete Compounding: i 5% Uniform Series Sin e P ent The maximum expenditure for the auxiliary equipment is SL. (Round to the nearest hundreds.) Compound Present Compound Present Capital Amount Worth Amount Worth Fund Recovery Factor Factor Factor Factor Factor Factor To Find F To Find P To Find F To Find P To Find A To Find A Given P Given F Given A Given A Given F Given P F/P P/F 0500 0.9524 0000 0.9524 0000 0500 025 0.9070 2.0500 8594 0.4878 0.5378 576 0.8638 3.1525 2.7232 0.3172 0.3672 .2155 0.8227 4.310 3.5460 0.2320 0.2820 2763 0.7835 5.5256 4.3295 0.1810 0.2310 340 0.7462 6.8019 5.0757 0.1470 0.1970 407 0.7107 8.1420 5.7864 0.1228 0.1728 4775 0.6768 9.549 6.4632 0.1047 0.1547 5513 0.6446 11.0266 7.1078 0.0907 0.1407 6289 0.6139 12.5779 7.7217 0.0795 0.1295 7103 0.5847 4.2068 8.3064 0.0704 0.1204 7959 0.5568 5.917 8.8633 0.0628 0.1128 1.8856 0.5303 9.3936 7.7130 0.0565 0.1065 9799 0.505 9.5986 9.8986 0.0510 0.1010 2.0789 0.4810 21.5786 0.3797 0.0463 0.0963 10.8378 2.1829 0.458 23.6575 0.0423 0.0923 2.2920 0.4363 25.8404 0.0387 274 0.0887 28.1324 2.4066 0.4155 6896 0.0355 0.0855 30.5390 2.5270 0.3957 12.0853 0.0327 0.0827 33.0660 20 2.6533 0.3769 2.4622 0.0302 0.0802 0.3589 2.7860 35.7193 2.8212 0.0280 0.0780 38.5052 22 2.9253 0.3418 3.1630 0.0260 0.0760 41.4305 23 3.0715 0.3256 13.4886 0.024 0.074 th 24 3.225 0.310 44.5020 3.7986 0.0225 0.0725 47.7271 3.3864 0.2953 4.0939 0.0210 0.0710Explanation / Answer
Maximum Expenditure for the auxillary equipment justifiable = Annual Saving in operating Expenses*PVIFA(rate,nper)
Maximum Expenditure for the auxillary equipment justifiable = 400*PVIFA(5%,24)
Maximum Expenditure for the auxillary equipment justifiable = 400* 13.7986
Maximum Expenditure for the auxillary equipment justifiable = $ 5519.44
Maximum Expenditure for the auxillary equipment justifiable = $ 5500 ( rounded to nearest hundred)
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