PROBLEM 7.39
FIRST COST = $250,000.00
O&M FIRST YEAR = $60,000.00
O&M EACH ADDN YR = $12,000.00
SALVAGE % DECLINE = 100.00%
MIN SALVAGE = $0.00
MARR = 10.00%
LIFE
StCR O&M EUAO&MC EUAC
0
1 $0.00 $275,000.00 $60,000.00 $60,000.00 $335,000.00
2 $0.00 $144,047.62 $72,000.00 $65,714.29 $209,761.90
3 $0.00 $100,528.70 $84,000.00 $71,238.67 $171,767.37
4 $0.00 $78,867.70 $96,000.00 $76,574.01 $155,441.72
5 $0.00 $65,949.37 $108,000.00 $81,721.51 $147,670.88
6 $0.00 $57,401.85 $120,000.00 $86,682.69 $144,084.53
7 $0.00 $51,351.37 $132,000.00 $91,459.38 $142,810.76 OPTIMUM
8 $0.00 $46,861.00 $144,000.00 $96,053.74 $142,914.75
9 $0.00 $43,410.13 $156,000.00 $100,468.22 $143,878.35
10 $0.00 $40,686.35 $168,000.00 $104,705.53 $145,391.87
OPTIMUM REPLACEMENT INTERVAL = 7 YEARS
MINIMUM EUAC = $142,810.76
PROBLEM 7.40
FIRST COST = $250,000.00
O&M FIRST YEAR = $60,000.00
O&M EACH ADDN YR = $8,000.00
SALVAGE % DECLINE = 20.00%
MIN SALVAGE = $0.00
MARR = 10.00%
LIFE
StCR O&M EUAO&MC EUAC
0
1 $200,000.00 $75,000.00 $60,000.00 $60,000.00 $135,000.00
2 $160,000.00 $67,857.14 $68,000.00 $63,809.52 $131,666.67
3 $128,000.00 $61,858.01 $76,000.00 $67,492.45 $129,350.45
4 $102,400.00 $56,803.49 $84,000.00 $71,049.34 $127,852.83
5 $81,920.00 $52,531.08 $92,000.00 $74,481.01 $127,012.09
6 $65,536.00 $48,907.90 $100,000.00 $77,788.46 $126,696.35 OPTIMUM
7 $52,428.80 $45,825.09 $108,000.00 $80,972.92 $126,798.01
8 $41,943.04 $43,193.34 $116,000.00 $84,035.83 $127,229.17
9 $33,554.43 $40,939.17 $124,000.00 $86,978.81 $127,917.98
10 $26,843.55 $39,002.04 $132,000.00 $89,803.68 $128,805.72
OPTIMUM REPLACEMENT INTERVAL = 6 YEARS
MINIMUM EUAC = $126,696.35
PROBLEM 7.41
FIRST COST = $225,000.00
O&M FIRST YEAR = $45,000.00
O&M EACH ADDN YR = $15,000.00
SALVAGE % DECLINE = 25.00%
MIN SALVAGE = $0.00
MARR = 10.00%
LIFE
StCR O&M EUAO&MC EUAC
0
1 $168,750.00 $78,750.00 $45,000.00 $45,000.00 $123,750.00
2 $126,562.50 $69,375.00 $60,000.00 $52,142.86 $121,517.86
3 $94,921.88 $61,798.53 $75,000.00 $59,048.34 $120,846.87 OPTIMUM
4 $71,191.41 $55,641.26 $90,000.00 $65,717.52 $121,358.78
5 $53,393.55 $50,608.70 $105,000.00 $72,151.89 $122,760.59
6 $40,045.17 $46,471.51 $120,000.00 $78,353.36 $124,824.87
7 $30,033.87 $43,050.50 $135,000.00 $84,324.23 $127,374.73
8 $22,525.41 $40,205.19 $150,000.00 $90,067.18 $130,272.37
9 $16,894.05 $37,825.03 $165,000.00 $95,585.27 $133,410.31
10 $12,670.54 $35,822.70 $180,000.00 $100,881.91 $136,704.60
OPTIMUM REPLACEMENT INTERVAL = 3 YEARS
MINIMUM EUAC = $120,846.87
PROBLEM 7.42
FIRST COST = $500,000.00
O&M FIRST YEAR = $125,000.00
O&M EACH ADDN YR = $25,000.00
SALVAGE % DECLINE = 100.00%
MIN SALVAGE = $0.00
MARR = 10.00%
LIFE
StCR O&M EUAO&MC EUAC
0
1 $0.00 $550,000.00 $125,000.00 $125,000.00 $675,000.00
2 $0.00 $288,095.24 $150,000.00 $136,904.76 $425,000.00
3 $0.00 $201,057.40 $175,000.00 $148,413.90 $349,471.30
4 $0.00 $157,735.40 $200,000.00 $159,529.20 $317,264.60
5 $0.00 $131,898.74 $225,000.00 $170,253.15 $302,151.89
6 $0.00 $114,803.69 $250,000.00 $180,588.93 $295,392.62
7 $0.00 $102,702.75 $275,000.00 $190,540.38 $293,243.13 OPTIMUM
8 $0.00 $93,722.01 $300,000.00 $200,111.96 $293,833.97
9 $0.00 $86,820.27 $325,000.00 $209,308.79 $296,129.06
10 $0.00 $81,372.70 $350,000.00 $218,136.51 $299,509.21
OPTIMUM REPLACEMENT INTERVAL = 7 YEARS
MINIMUM EUAC = $293,243.13
PROBLEM 7.43
FIRST COST = $500,000.00
O&M FIRST YEAR = $125,000.00
O&M EACH ADDN YR = $15,000.00
SALVAGE % DECLINE = 20.00%
MIN SALVAGE = $0.00
MARR = 10.00%
LIFE
StCR O&M EUAO&MC EUAC
0
1 $400,000.00 $150,000.00 $125,000.00 $125,000.00 $275,000.00
2 $320,000.00 $135,714.29 $140,000.00 $132,142.86 $267,857.14
3 $256,000.00 $123,716.01 $155,000.00 $139,048.34 $262,764.35
4 $204,800.00 $113,606.98 $170,000.00 $145,717.52 $259,324.50
5 $163,840.00 $105,062.16 $185,000.00 $152,151.89 $257,214.05
6 $131,072.00 $97,815.79 $200,000.00 $158,353.36 $256,169.15
7 $104,857.60 $91,650.18 $215,000.00 $164,324.23 $255,974.41 OPTIMUM
8 $83,886.08 $86,386.67 $230,000.00 $170,067.18 $256,453.85
9 $67,108.86 $81,878.34 $245,000.00 $175,585.27 $257,463.61
10 $53,687.09 $78,004.08 $260,000.00 $180,881.91 $258,885.99
OPTIMUM REPLACEMENT INTERVAL = 7 YEARS
MINIMUM EUAC = $255,974.41
PROBLEM 7.44
FIRST COST = $500,000.00
O&M FIRST YEAR = $125,000.00
O&M % INCREASE = 15.00%
SALVAGE % DECLINE = 25.00%
MARR = 10.00%
LIFE
StCR O&M EUAO&MC EUAC
0
1 $375,000.00 $175,000.00 $125,000.00 $125,000.00 $300,000.00
2 $281,250.00 $154,166.67 $143,750.00 $133,928.57 $288,095.24
3 $210,937.50 $137,330.06 $165,312.50 $143,410.12 $280,740.18
4 $158,203.13 $123,647.25 $190,109.38 $153,472.45 $277,119.69
5 $118,652.34 $112,463.79 $218,625.78 $164,144.40 $276,608.18 OPTIMUM
6 $88,989.26 $103,270.03 $251,419.65 $175,455.92 $278,725.94
7 $66,741.94 $95,667.78 $289,132.60 $187,438.06 $283,105.84
8 $50,056.46 $89,344.87 $332,502.49 $200,123.08 $289,467.95
9 $37,542.34 $84,055.63 $382,377.86 $213,544.42 $297,600.05
10 $28,156.76 $79,605.99 $439,734.54 $227,736.81 $307,342.80
OPTIMUM REPLACEMENT INTERVAL = 5 YEARS
MINIMUM EUAC = $276,608.18
PROBLEM 7.45
FIRST COST = $500,000.00
O&M FIRST YEAR = $125,000.00
O&M % INCREASE = 10.00%
SALVAGE % DECLINE = 35.00%
MARR = 10.00%
LIFE
StCR O&M EUAO&MC EUAC
0
1 $325,000.00 $225,000.00 $125,000.00 $125,000.00 $350,000.00
2 $211,250.00 $187,500.00 $137,500.00 $130,952.38 $318,452.38
3 $137,312.50 $159,573.26 $151,250.00 $137,084.59 $296,657.85
4 $89,253.13 $138,503.96 $166,375.00 $143,395.82 $281,899.78
5 $58,014.53 $122,396.11 $183,012.50 $149,884.93 $272,281.04
6 $37,709.45 $109,916.27 $201,313.75 $156,550.49 $266,466.75
7 $24,511.14 $100,119.14 $221,445.13 $163,390.74 $263,509.88
8 $15,932.24 $92,328.83 $243,589.64 $170,403.65 $262,732.48 OPTIMUM
9 $10,355.96 $86,057.65 $267,948.60 $177,586.91 $263,644.57
10 $6,731.37 $80,950.33 $294,743.46 $184,937.95 $265,888.28
OPTIMUM REPLACEMENT INTERVAL = 8 YEARS
MINIMUM EUAC = $262,732.48
PROBLEM 7.46
TRUE
DECREASING THE RATE OF INCREASE IN O&M COSTS TENDS TO INCREASE THE OPTIMUM REPLACEMENT INTERVAL
PROBLEM 7.47
FALSE
SUBTRACTING A CONSTANT FROM THE EUAC WILL NOT CHANGE THE OPTIMUM REPLACEMENT INTERVAL
PROBLEM 7.48
TRUE
CAPITAL RECOVERY COST WILL DECREASE WITH AN INCREASE IN THE LIFE OF THE EQUIPMENT.
EUACO&M IS UNCHANGED WITH AN INCREASE IN THE LIFE OF THE EQUIPMENT.
HENCE, EUAC WILL DECREASE WITH INCREASED LIFE. THEREFORE, CONTINUE
USING THE EQUIPMENT AS LONG AS IT IS FUNCTIONAL.
PROBLEM 7.49
TRUE
WITH AN INCREASING GOEMETRIC SERIES, O&M COST INCREASES EACH YEAR. DECREASING THE
MAGNITUDE OF THE O&M COST IN THE FIRST YEAR WILL CAUSE THE INCREMENTAL YEAR-TO-YEAR
CHANGE IN O&M COST TO DECREASE. DECREASING THE RATE OF INCREASE IN O&M COSTS TENDS TO
INCREASE THE OPTIMUM REPLACEMENT INTERVAL
PROBLEM 7.50
TRUE
DECREASING THE RATE OF DECREASE IN SALVAGE VALUE TENDS TO INCREASE THE OPTIMUM REPLACEMENT INTERVAL