engineer economic analys 5

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  • the full question in the attach file


  • 2.5 points) Find the present value, P, for the following cash flows.
  • (2.5 points) Star Inc. must purchase a small size milling machine. The following is known about the machine and about possible cash flows. The machine is expected to have a useful life of 8 years. The company has a MARR of 7%. Determine the NPW of the machine.
  • (2.5 points) The company accountant is uncertain which of three depreciation methods the firm should use for welding equipment that costs $150,000, and has a zero salvage value at the end of a 10-year depreciable life. Compute the depreciation schedule for the welding equipment using the methods listed:
    • Straight line
    • Double declining balance
    • Sum-of-years’ –digits
  • (2.5 points) A Petroleum company recently completed construction on a large refinery in Louisiana. The final construction cost was $71,000,000. The refinery covers a total of 260 acres. The Expansion and Acquisition Department at the company is currently working on plans for a new refinery in Texas. The anticipated size is approximately 360 acres. If the power-sizing exponent for this type of facility is .70, what is the estimated cost of construction?

i = 12%

p=.25

p=.50

p=.25

First cost

$40,000

$40,000

$40,000

Annual savings

2,000

5,000

8,000

Annual costs

12,000

8,000

6,000

Actual salvage value

4,000

5,000

6,500

Based on your analysis, which depreciation method is most profitable for the firm?

 
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