1.
IPS. Corp will upgrade its package-labeling machinery. It costs $150,000 to buy the machinery costs, which are $5000 per year for the first 3 years, increase by $500 per year for the machineâs 10-year life. The machinery has a salvage value of 5% of its initial cost. Interest is 15%. What is the future worth of cost of the machinery?
2) Each of the three mutually exclusive alternatives shown has a 5-year useful life. If the MARR is 10%, which alternative should be selected? Solve the problem by cost-benefit ration analysis.
A B C
cost $600.0 $ 500.0 $200.0
uniform annual benefit 158.3 138.7 58.3
3) A project has the following costs and benefits. What is the payback period
Year Cost Benefits
0 $55,000
1 $15,000
2 $5,000 $50,000
3-10 $5000 in each year
B) Mention two disadvantages of using the payback period analysis
1.
IPS. Corp will upgrade its package-labeling machinery. It costs $150,000 to buy the machinery costs, which are $5000 per year for the first 3 years, increase by $500 per year for the machineâs 10-year life. The machinery has a salvage value of 5% of its initial cost. Interest is 15%. What is the future worth of cost of the machinery?
2) Each of the three mutually exclusive alternatives shown has a 5-year useful life. If the MARR is 10%, which alternative should be selected? Solve the problem by cost-benefit ration analysis.
A B C
cost $600.0 $ 500.0 $200.0
uniform annual benefit 158.3 138.7 58.3
3) A project has the following costs and benefits. What is the payback period
Year Cost Benefits
0 $55,000
1 $15,000
2 $5,000 $50,000
3-10 $5000 in each year
B) Mention two disadvantages of using the payback period analysis
Related textbook solutions
Related questions
1a) A project has the following costs and benefits. What is the payback period
| year | cost | benefits |
| 0 | $55,000 | |
| 1 | $15,000 | |
| 2 | $5000 | $50,000 |
| 3-10 | $5,000 each year |
1b) Mention two disadvantages of using the payback period analysis
1c) Two mutually exclusive alternatives are being considered for reducing traffic congestion. User benefits come from reduces congestion once the project complete, while user disbenefits are due to increased congestion during construction. The interest rate is 8%, and the life of each alternative is 15 years. Which alternative should be chosen?
| A | B | |
| User benefits ($M/yr) | 2.1 | 2.6 |
| User dis-benefits ($M) | 1.2 | 2.1 |
| First cost($M) | 6.9 | 9.9 |
| Operations and maintenance $M/yr) | 0.75 | 0.825 |
a) Use the benefit-cost ratio
b) Use the government version of the B/C ratio
