ENEP427 Chapter Notes - Chapter 7: Amory Lovins, Arthur H. Rosenfeld, Net Present Value
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Engineering Economy class. Please, when answering this problem, it will be more than appreciated if you can present the whole process (equations) before solving it. Just to understand better everything. Example: Present Value = 20,000(P/F, i, n)+45,000(A/F, i, n)(P/F, i, n)... Thanks in advance!
There are two manufacturing processes that can be used by a company to reduce energy losses in the equipment. The following cost information for these two processes is known:
| Process A | Process B | |
| Initial Cost | $170,000 | $220,000 |
| Operation and Maintenance Cost | $7,000 quarterly | $5,000 quarterly |
| Useful Life (Life Cycle) | 2 years | 4 years |
| Residual Value | $30,000 | $42,000 |
By doing the following analysis, select which manufacturing process must be selected (A or B):
a) Find the Present Value with an interest rate of 12% annually computed quarterly.
b) Quarterly equivalent uniform value with an interest rate of 8% annually computed quarterly
c) Capitalized Cost with an interest rate of 14% annually computed quarterly
d) Which manufacturing process must be selected
Select the term that best fits each of the following definitions and descriptions.
| a. | Notes receivable |
| b. | Nontrade receivables |
| c. | Net realizable value |
| d. | Direct write-off method |
| e. | Interest-bearing note |
| f. | Maturity date |
| g. | Promissory note |
| h. | Factoring receivables |
| i. | Trade discount |
| j. | Present value |
| k. | Allowance method |
| l. | Sales discount |
| m. | Negotiable note |
| n. | Non-interest-bearing note |
| o. | Assignment of receivables |
| p. | Valuation date |
____ 21. Receivables that are evidenced by a formal written promise to pay a certain sum of money at a specified date.
____ 22. The date the principal amount of a note is due to be paid.
____ 23. The sum of future receipts or payments discounted to the present date at an appropriate rate of interest.
____ 24. A method of recognizing the estimated losses from uncollectible accounts as expenses during the period in which the sales occur.
____ 25. A note that is legally transferable by endorsement and delivery.
____ 26. Any receivable arising from transactions that are not directly associated with the normal operating activities of a business.
____ 27. A note written in the form where the face amount includes the interest charges.
____ 28. The borrowing of money with receivables pledged as security on the loan.
____ 29. A note written in the form where the maker promises to pay the face amount plus interest at a specified rate.
____ 30. An unconditional written promise to pay a certain sum of money at a specified time.
