Owns a pump that it is contemplating replacing

Assignment Help Business Economics

Reference no: EM13898451

Fluid Dynamics Company owns a pump that it is contemplating replacing. The old pump has annual operating and maintenance costs of $8,000/year: it can be kept for 4 years more and will have a zero salvage value at that time.

The old pump can be traded in on a new pump. The trade-in value is $4,000. The new pump will cost $18,000 and have a value of $9,000 in 4 years and will have annual operating and maintenance costs of $4,500/year.

Using a MARR of 10%, evaluate the investment alternative based upon the present worth method and a planning horizon of 4 years.

Use the opportunity cost approach.

Reference no: EM13898451

Questions Cloud

Cast stones at the economic policies : Often, there is news and critics that cast stones at the economic policies of Congress and/or the President. However, I find that average critics don't offer up an alternative solution, but simply criticize. Pretent that you are in charge for a day o..

How do average variable cost, average fixed cost : How do average variable cost, average fixed cost, and marginal cost vary as production levels for a firm are increased? are short term costs linked to just one input factor as a variable, with all other factors held constant as production increases?

Christopher notices that his discover card statement : Christopher notices that his Discover Card statement gives the company’s Web address (Discovercard.com) and directs him there to pay his bills and answer his questions. What e-business strategy is Discover employing with this reference to its Web sit..

Market for wheat as a result of this action : Given the market for wheat in equilibrium, assume that the government imposes a price floor on wheat. Explain what happens to the market for wheat as a result of this action? Draw and graph to fully illustrate the situation.

Owns a pump that it is contemplating replacing : Fluid Dynamics Company owns a pump that it is contemplating replacing. The old pump has annual operating and maintenance costs of $8,000/year: it can be kept for 4 years more and will have a zero salvage value at that time. The old pump can be traded..

Use the opportunity cost approach : Esteez Construction Company has an overhead crane that has an estimated remaining life of 7 years. The crane can be sold for $14,000. If the crane is kept in service it must be overhauled immediately at a cost of $6,000. Operating and maintenance cos..

Theory of political business cycles : Suppose that fiscal policy changes output faster than it changes the price level. How might such timing play a role in the theory of political business cycles?

What price should it charge if it were to maximize revenue : A monopolistic firm faces the following demand curve. What would be its equilibrium profit? What price should it charge if it were to maximize its revenue? What would be its profit if it maximized its revenue? If this monopoly were to behave like a ..

Firm employs capital-labor to produce-production function : Suppose a firm employs capital (K) and labor (L) to produce a product with the following production function: Q = min(K, L), where Q is the quantity produced and min(K, L) is the minimum (i.e., smallest) value of K or L. For example, if K = 20 and L ..

User Account

All Pages