Overall Review 1. 10 years ago, a allon metal tank could hold hazardous material
ID: 2727010 • Letter: O
Question
Overall Review 1. 10 years ago, a allon metal tank could hold hazardous materials costing S200,000 What would a 4,500-gallon tank cost today if the zing exponent is 0.56 and the construction cost index for such facilities has increased from 200 to 600 over the last 10 years? 2. Nicole wishes to double her investment in 6 years. If a financial institution offers her an interest rate that will enable her wish to come true, and assuming the interest is compounded quarterly, what would be the nominal interest offered by the financial institution? 3. It is estimated that the annual maintenance cost of a statue erected in front of a public building in Washington City Hall would be $5,000. Assuming an interest rate of 12% year compounded monthly, determine the capitalized cost for maintaining the statue. 4. Zambrota Inc, an Italian company, is considering the following two equipment alternatives for their plant in Omaha. The cost information for the two machines are considered in the table below. Machine Y Machine X $85,000 $100,000 Initial Cost Benefits year $20,000 for the first 10 years and $9,500 per year for 20 S10,000 for the next 5 years Life S20,000 Salvage value $35,000 8% MARR The net present worth (NPW) of machine X is Data for Problems 5 and 6 In an equipment acquisition proposal, Home Plus Enterprise has worked out to deal on the interest rate with the vendor. The equipment is being financed for 4 years with monthly payments. The deal with the vendor is show below. The interest rate is 1% per month for the first 20 payments and for the rest of the payments, the interest rate would be 0.5 per month. The equipment cost is $500,000. 5. Determine the monthly payment for the first 20 months.Explanation / Answer
Answer:1 Apply cost index method first
$200000/X=200/600
X=600000
Then, use answer for second step – power-sizing model
$600000/y=(2000 gals/4500 gal)^0.56
$600000/y=0.63500594
y=944873.051
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