PROBLEM 7.30
FIRST COST = $14,000.00
O&M FIRST YEAR = $3,500.00
O&M EACH ADDN YR = $600.00
SALVAGE % DECLINE = 30%
MARR = 15.00%
LIFE
StCR O&M EUAO&MC EUAC
0
1 $9,800.00 $6,300.00 $3,500.00 $3,500.00 $9,800.00
2 $6,860.00 $5,420.93 $4,100.00 $3,779.07 $9,200.00
3 $4,802.00 $4,748.81 $4,700.00 $4,044.28 $8,793.09
4 $3,361.40 $4,230.54 $5,300.00 $4,295.75 $8,526.30
5 $2,352.98 $3,827.43 $5,900.00 $4,533.69 $8,361.12
6 $1,647.09 $3,511.16 $6,500.00 $4,758.31 $8,269.47
7 $1,152.96 $3,260.86 $7,100.00 $4,969.91 $8,230.77
8 $807.07 $3,061.11 $7,700.00 $5,168.80 $8,229.90 OPTIMUM
9 $564.95 $2,900.38 $8,300.00 $5,355.34 $8,255.72
PROBLEM 7.31
FIRST COST = $128,000.00
O&M FIRST YEAR = $10,000.00
O&M % INCREASE = 25.00%
SALVAGE % DECLINE = 30.00%
MARR = 15.00%
LIFE
StCR O&M EUAO&MC EUAC
0
1 $89,600.00 $57,600.00 $10,000.00 $10,000.00 $67,600.00
2 $62,720.00 $49,562.79 $12,500.00 $11,162.79 $60,725.58
3 $43,904.00 $43,417.71 $15,625.00 $12,447.80 $55,865.51
4 $30,732.80 $38,679.25 $19,531.25 $13,866.37 $52,545.62
5 $21,512.96 $34,993.68 $24,414.06 $15,430.76 $50,424.44
6 $15,059.07 $32,102.02 $30,517.58 $17,154.23 $49,256.25
7 $10,541.35 $29,813.61 $38,146.97 $19,051.14 $48,864.75 OPTIMUM
8 $7,378.95 $27,987.25 $47,683.72 $21,137.03 $49,124.28
9 $5,165.26 $26,517.76 $59,604.64 $23,428.70 $49,946.46
PROBLEM 7.32
FIRST COST = $70,000.00
O&M FIRST YEAR = $14,000.00
O&M EACH ADDN YR = $1,000.00
SALVAGE % DECLINE = 20.00%
MIN SALVAGE = $3,000.00
MARR = 15.00%
LIFE
StCR O&M EUAO&MC EUAC
0
1 $56,000.00 $24,500.00 $14,000.00 $14,000.00 $38,500.00
2 $44,800.00 $22,220.93 $15,000.00 $14,465.12 $36,686.05
3 $35,840.00 $20,337.29 $16,000.00 $14,907.13 $35,244.42
4 $28,672.00 $18,776.57 $17,000.00 $15,326.26 $34,102.82
5 $22,937.60 $17,480.09 $18,000.00 $15,722.81 $33,202.90
6 $18,350.08 $16,400.33 $19,000.00 $16,097.19 $32,497.52
7 $14,680.06 $15,498.73 $20,000.00 $16,449.85 $31,948.58
8 $11,744.05 $14,743.95 $21,000.00 $16,781.33 $31,525.28
9 $9,395.24 $14,110.47 $22,000.00 $17,092.23 $31,202.69
10 $7,516.19 $13,577.46 $23,000.00 $17,383.20 $30,960.65
11 $6,012.95 $13,127.88 $24,000.00 $17,654.94 $30,782.82
12 $4,810.36 $12,747.79 $25,000.00 $17,908.20 $30,655.99
13 $3,848.29 $12,425.71 $26,000.00 $18,143.76 $30,569.47
14 $3,078.63 $12,152.19 $27,000.00 $18,362.41 $30,514.60
15 $3,000.00 $11,908.14 $28,000.00 $18,564.96 $30,473.10
16 $3,000.00 $11,702.50 $29,000.00 $18,752.25 $30,454.74
17 $3,000.00 $11,529.58 $30,000.00 $18,925.09 $30,454.67 OPTIMUM
18 $3,000.00 $11,383.48 $31,000.00 $19,084.31 $30,467.79
19 $3,000.00 $11,259.54 $32,000.00 $19,230.73 $30,490.26
PROBLEM 7.33
FIRST COST = $400,000.00
OP COST FIRST YEAR = $20,000.00
OP COST INCR = 8.00%
MAINT COST FIRST YR = $8,000.00
MAINT COST INCR = 35.00%
MARKET VAL YEAR 1 = $310,000.00
MARKET VAL DECR = $40,000.00
MARKET VAL MIN = $30,000.00
MARR = 20.00%
LIFE
StCR OP COST MAINT COST TOTAL O&M EUAO&MC EUAC
0
1 $310,000.00 $170,000.00 $20,000.00 $8,000.00 $28,000.00 $28,000.00 $198,000.00
2 $270,000.00 $139,090.91 $21,600.00 $10,800.00 $32,400.00 $30,000.00 $169,090.91
3 $230,000.00 $126,703.30 $23,328.00 $14,580.00 $37,908.00 $32,172.53 $158,875.82
4 $190,000.00 $119,120.72 $25,194.24 $19,683.00 $44,877.24 $34,539.28 $153,659.99
5 $150,000.00 $113,594.93 $27,209.78 $26,572.05 $53,781.83 $37,125.09 $150,720.01
6 $110,000.00 $109,204.67 $29,386.56 $35,872.27 $65,258.83 $39,958.32 $149,162.98
7 $70,000.00 $105,549.90 $31,737.49 $48,427.56 $80,165.05 $43,071.28 $148,621.17
8 $30,000.00 $102,425.49 $34,276.49 $65,377.21 $99,653.69 $46,500.71 $148,926.19
9 $30,000.00 $97,789.40 $37,018.60 $88,259.23 $125,277.83 $50,288.27 $148,077.67 OPTIMUM
10 $30,000.00 $94,253.42 $39,980.09 $119,149.96 $159,130.05 $54,481.15 $148,734.57
11 $30,000.00 $91,508.40 $43,178.50 $160,852.45 $204,030.95 $59,132.72 $150,641.12
12 $30,000.00 $89,348.04 $46,632.78 $217,150.80 $263,783.58 $64,303.22 $153,651.25
PROBLEM 7.34
DEFENDER‘S MARKET VALUE = $11,000.00
CHALLENGER‘S FIRST COST = $17,000.00
MARR = 0.00%
0 1 2 3 4 5 6
YEAR CF CF CF CF CF CF CF
0 -$6,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
1 -$1,000.00 -$10,500.00 -$1,500.00 -$1,500.00 -$1,500.00 -$1,500.00 -$1,500.00
2 -$1,100.00 -$1,000.00 -$12,800.00 -$1,800.00 -$1,800.00 -$1,800.00 -$1,800.00
3 -$1,200.00 -$1,100.00 -$1,000.00 -$14,100.00 -$2,100.00 -$2,100.00 -$2,100.00
4 -$1,300.00 -$1,200.00 -$1,100.00 -$1,000.00 -$14,400.00 -$2,400.00 -$2,400.00
5 -$1,400.00 -$1,300.00 -$1,200.00 -$1,100.00 -$1,000.00 -$16,700.00 -$2,700.00
6 $5,500.00 $6,600.00 $7,700.00 $8,800.00 $9,900.00 $12,000.00 -$1,000.00
PW = -$6,500.00 -$8,500.00 -$9,900.00 -$10,700.00 -$10,900.00 -$12,500.00 -$11,500.00
RECOMMENDATION: REPLACE IMMEDIATELY!
IF MARR = 15%
DEFENDER‘S MARKET VALUE = $11,000.00
CHALLENGER‘S FIRST COST = $17,000.00
MARR = 15.00%
0 1 2 3 4 5 6
YEAR CF CF CF CF CF CF CF
0 -$6,000.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
1 -$1,000.00 -$10,500.00 -$1,500.00 -$1,500.00 -$1,500.00 -$1,500.00 -$1,500.00
2 -$1,100.00 -$1,000.00 -$12,800.00 -$1,800.00 -$1,800.00 -$1,800.00 -$1,800.00
3 -$1,200.00 -$1,100.00 -$1,000.00 -$14,100.00 -$2,100.00 -$2,100.00 -$2,100.00
4 -$1,300.00 -$1,200.00 -$1,100.00 -$1,000.00 -$14,400.00 -$2,400.00 -$2,400.00
5 -$1,400.00 -$1,300.00 -$1,200.00 -$1,100.00 -$1,000.00 -$16,700.00 -$2,700.00
6 $5,500.00 $6,600.00 $7,700.00 $8,800.00 $9,900.00 $12,000.00 -$1,000.00
PW = -$7,551.87 -$9,088.92 -$9,537.12 -$9,250.55 -$8,496.57 -$8,533.32 -$7,193.10
RECOMMENDATION: DO NOT REPLACE
REPLACEMENT YEAR
REPLACEMENT YEAR
PROBLEM 7.35
FIRST COST = $45,000.00
SALVAGE = $0.00
MARR = 15%
a) LIFE
StCR O&M EUAO&MC EUAC
0
3 $0.00 $19,708.96 $9,150.00 $7,403.89 $27,112.85
4 $0.00 $15,761.94 $10,950.00 $8,114.05 $23,875.99
5 $0.00 $13,424.20 $12,900.00 $8,823.88 $22,248.08
RECOMMENDATION: REPLACE EVERY 8 YEARS
{12,3} PW = $129,808.81
{13,2} PW = $132,904.65
RECOMMENDATION: REPLACE AFTER 8 YEARS
MARR = 0%
c) LIFE
StCR O&M EUAO&MC EUAC
0
4 $0.00 $11,250.00 $10,950.00 $8,400.00 $19,650.00
5 $0.00 $9,000.00 $12,900.00 $9,300.00 $18,300.00
6 $0.00 $7,500.00 $15,000.00 $10,250.00 $17,750.00
7 $0.00 $6,428.57 $17,250.00 $11,250.00 $17,678.57 OPTIMUM
14 $0.00 $3,214.29 $37,800.00 $19,757.14 $22,971.43
15 $0.00 $3,000.00 $41,400.00 $21,200.00 $24,200.00
RECOMMENDATION: REPLACE EVERY 7 YEARS
ALTERNATIVE
{12,3} PW = $317,100.00
{13,2} PW = $342,300.00
RECOMMENDATION: REPLACE AFTER 7 YEARS
d) CONCLUSION: AS THE DISCOUNT RATE INCREASES, THE OPTIMUM REPLACEMENT INTERVAL TENDS TO INCREASE.
PROBLEM 7.36
FIRST COST = $44,000.00
SALVAGE =
$44,000(0.50)n
O&M(t) =
$4,000(1.10)t
MARR = 0%
a) LIFE (t)
StCR O&M EUAO&MC EUAC
2$11,000.00 $16,500.00 $4,840.00 $4,620.00 $21,120.00
3$5,500.00 $12,833.33 $5,324.00 $4,854.67 $17,688.00
4$2,750.00 $10,312.50 $5,856.40 $5,105.10 $15,417.60
5$1,375.00 $8,525.00 $6,442.04 $5,372.49 $13,897.49
8$171.88 $5,478.52 $8,574.36 $6,289.74 $11,768.25
9$85.94 $4,879.34 $9,431.79 $6,638.86 $11,518.20
10 $42.97 $4,395.70 $10,374.97 $7,012.47 $11,408.17 OPTIMUM
11 $21.48 $3,998.05 $11,412.47 $7,412.47 $11,410.51
12 $10.74 $3,665.77 $12,553.71 $7,840.90 $11,506.68
RECOMMENDATION: REPLACE EVERY 10 YEARS
O&M(t) =
$4,000(1.10)t
MARR = 10%
b) LIFE
StCR O&M EUAO&MC EUAC
2$11,000.00 $20,114.29 $4,840.00 $4,609.52 $24,723.81
3$5,500.00 $16,031.42 $5,324.00 $4,825.38 $20,856.80
4$2,750.00 $13,288.17 $5,856.40 $5,047.53 $18,335.70
5$1,375.00 $11,381.87 $6,442.04 $5,275.95 $16,657.82
6$687.50 $10,013.62 $7,086.24 $5,510.58 $15,524.20
8$171.88 $8,232.51 $8,574.36 $5,998.21 $14,230.72
9$85.94 $7,633.86 $9,431.79 $6,251.06 $13,884.91
10 $42.97 $7,158.10 $10,374.97 $6,509.82 $13,667.92
11 $21.48 $6,773.22 $11,412.47 $6,774.38 $13,547.60
12 $10.74 $6,457.08 $12,553.71 $7,044.64 $13,501.72 OPTIMUM
RECOMMENDATION: REPLACE AT ITS MAXIMUM LIFE OF 12 YEARS
PROBLEM 7.37
FIRST COST = $100,000.00
O&M FIRST YEAR = $25,000.00
O&M EACH ADDN YR = $5,000.00
SALVAGE % DECLINE = 100.00%
MIN SALVAGE = $0.00
MARR = 10.00%
LIFE
StCR O&M EUAO&MC EUAC
0
1 $0.00 $110,000.00 $25,000.00 $25,000.00 $135,000.00
2 $0.00 $57,619.05 $30,000.00 $27,380.95 $85,000.00
3 $0.00 $40,211.48 $35,000.00 $29,682.78 $69,894.26
4 $0.00 $31,547.08 $40,000.00 $31,905.84 $63,452.92
5 $0.00 $26,379.75 $45,000.00 $34,050.63 $60,430.38
6 $0.00 $22,960.74 $50,000.00 $36,117.79 $59,078.52
7 $0.00 $20,540.55 $55,000.00 $38,108.08 $58,648.63 OPTIMUM
8 $0.00 $18,744.40 $60,000.00 $40,022.39 $58,766.79
9 $0.00 $17,364.05 $65,000.00 $41,861.76 $59,225.81
10 $0.00 $16,274.54 $70,000.00 $43,627.30 $59,901.84
OPTIMUM REPLACEMENT INTERVAL = 7 YEARS
MINIMUM EUAC = $58,648.63
PROBLEM 7.38
FIRST COST = $100,000.00
O&M FIRST YEAR = $25,000.00
O&M % INCREASE = 15.00%
SALVAGE % DECLINE = 100.00%
MARR = 10.00%
LIFE
StCR O&M EUAO&MC EUAC
0
1 $0.00 $110,000.00 $25,000.00 $25,000.00 $135,000.00
2 $0.00 $57,619.05 $28,750.00 $26,785.71 $84,404.76
3 $0.00 $40,211.48 $33,062.50 $28,682.02 $68,893.50
4 $0.00 $31,547.08 $38,021.88 $30,694.49 $62,241.57
5 $0.00 $26,379.75 $43,725.16 $32,828.88 $59,208.63
6 $0.00 $22,960.74 $50,283.93 $35,091.18 $58,051.92
7 $0.00 $20,540.55 $57,826.52 $37,487.61 $58,028.16 OPTIMUM
8 $0.00 $18,744.40 $66,500.50 $40,024.62 $58,769.02
9 $0.00 $17,364.05 $76,475.57 $42,708.88 $60,072.94
10 $0.00 $16,274.54 $87,946.91 $45,547.36 $61,821.90
OPTIMUM REPLACEMENT INTERVAL = 7 YEARS
MINIMUM EUAC = $58,028.16