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    Ce40 A3 CW Co2 Seat

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    Kenneth Pera
    1. The document presents a cash flow diagram for a mechanical device that costs $20,000 to purchase with annual maintenance costs of $1,000 for 5 years. The device generates $5,000 in annual revenue for 5 years and has a salvage value of $7,000. 2. A proposed project with an initial cost of $40M and annual perpetual cost of $12M should not be undertaken because its capitalized benefit of $49M is less than its total cost of $40M + $12M + $0. 3. The calculation of the capitalized cost (CC) of a project with an initial cost of P150,000, annual operating cost of P

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    Ce40 A3 CW Co2 Seat

    Uploaded by

    Kenneth Pera
    47 views1 page
    1. The document presents a cash flow diagram for a mechanical device that costs $20,000 to purchase with annual maintenance costs of $1,000 for 5 years. The device generates $5,000 in annual revenue for 5 years and has a salvage value of $7,000. 2. A proposed project with an initial cost of $40M and annual perpetual cost of $12M should not be undertaken because its capitalized benefit of $49M is less than its total cost of $40M + $12M + $0. 3. The calculation of the capitalized cost (CC) of a project with an initial cost of P150,000, annual operating cost of P

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    Seatatataworksksks

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    CE40-A3-CW-CO2-SEAT

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    1. The document presents a cash flow diagram for a mechanical device that costs $20,000 to purchase with annual maintenance costs of $1,000 for 5 years. The device generates $5,000 in annual revenue for 5 years and has a salvage value of $7,000. 2. A proposed project with an initial cost of $40M and annual perpetual cost of $12M should not be undertaken because its capitalized benefit of $49M is less than its total cost of $40M + $12M + $0. 3. The calculation of the capitalized cost (CC) of a project with an initial cost of P150,000, annual operating cost of P

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Download as docx, pdf, or txt
    47 views1 page

    Ce40 A3 CW Co2 Seat

    Uploaded by

    Kenneth Pera
    1. The document presents a cash flow diagram for a mechanical device that costs $20,000 to purchase with annual maintenance costs of $1,000 for 5 years. The device generates $5,000 in annual revenue for 5 years and has a salvage value of $7,000. 2. A proposed project with an initial cost of $40M and annual perpetual cost of $12M should not be undertaken because its capitalized benefit of $49M is less than its total cost of $40M + $12M + $0. 3. The calculation of the capitalized cost (CC) of a project with an initial cost of P150,000, annual operating cost of P

    Copyright:

    © All Rights Reserved
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    of 1

    CE40/A3

    CE-3

    1. A mechanical device will cost $20,000 when purchased. Maintenance will cost $1000 per year.
    The device will generate revenues of $5000 per year for 5 years. The salvage value is $7000.
    Show cash flow diagram.

    2. The initial cost of a proposed project is $40M, the capitalized perpetual annual cost is $12M, the
    capitalized benefit is $49M, and the residual value is $0. Should the project be undertaken?

    Project is considered acceptable if B – C ≥ 0 or B/C ≥ 1.


    B = $49M, C = $40M + $12M + $0
    B – C = $49M – $52M = –$3M < 0
    Therefore the project should not be undertaken.

    3. Calculate the CC of a project with an Initial Cost of P150,000. The annual operating cost is
    P8,000 for 4-year period and P5,000 thereafter. The maintenance cost every 15 years is
    P150,000. Interest is 15 percent annually.

    Solution:
    PO = -P150,000 -P3,000(P|A, 15%, 4) = -P158565
    A = -P5000 –P15,000(A|F, 15%, 15) = P5,315
    CC = -P158,565 +( -P5315 /. 15)
    CC = -P193.998

    Reference: http://www.valpo.edu/student/asme/FE%20Slides/EngEconSlides.pdf

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