1. The Deadeye Distillery is opening a new production facility at Sweetwater Springs. Two types of stills are being considered and the following cost estimates have been developed:
|
Data
|
Alternative
|
|
MASHER
|
SQUEEZER
|
|
Life. Years
|
4
|
6
|
|
First Cost
|
$10,000
|
S15,000
|
|
Salvage Value
|
$0
|
$2,000
|
|
M&O Cost
|
$500
|
51,000
|
|
M&O Gradient
|
$:_00,
|
$400
|
Using the present worth analysis, determine which alternative should selected. MARR = 25%.
2. Use an interest rate of 12% and determine the capitalized equivalent of the following cash flow system.
|
Year
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
10
|
11
|
--
|
|
Cash Flow, $
|
850
|
700
|
550
|
400
|
250
|
100
|
850
|
700
|
550
|
400
|
250
|
--
|
3. The first cash flow of a 25-year series of quarterly cash flows is equal to $35,000. Each cash flow in the series increases by $800. Find the amount of each cash flow in an equal quarterly cash flow series that is equivalent to the increasing cash flow series. The interest rate is 14% and compounding is done quarterly.