Two Flash Vaporizer Machines Are Considered for the Upgrade of Biodiesel

question 9

Essay

Two flash vaporizer machines are considered for the upgrade of biodiesel production. An engineer is asked to perform analyses to select the best machine. He prepares the following information for the evaluation. Machine X has a useful life of 8 years and machine Y has a useful life of 11 years. Compute the market value of Machine Y at the end of year 8 and determine which machine should be selected based on annual worth method using an interest rate of 13% per year and a study period of 8 years. $$\begin{array} { | l | l | l | } \hline \text { Machine } & x & Y \\\hline \text { First costs } & \$ 29,000 & \$ 32,000 \\\hline \text { Net annual revenue } & \$ 10,500 & \$ 12,000 \\\hline \text { Market value at the end of the } & \$ 6900 & \$ 6000 \\\text { useful life } & & \\\hline \text { Life, years } & 8 & 11 \\\hline\end{array}$$

Understand the impact of market conditions such as surplus or shortage on prices.

Grasp the effects of government interventions, like subsidies or price ceilings, on market supply and demand.

Comprehend the relationship between the prices of goods and their substitutes or complements on market demand.

Master the concept of equilibrium in the market, recognizing how various factors influence equilibrium price and quantity.

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Definitions:

Equipment Purchases

Transactions involving the acquisition of physical assets for use in the production or supply of goods and services, typically considered as capital expenditure.

Cash

Money in the form of bills or coins, available for transactions or on hand.

Equipment

Tangible assets used in operations, such as machinery or office hardware, which are not intended for sale in the regular course of business.

Cash Flow

The net amount of cash being transferred into and out of a business, especially in terms of operational, investing, and financing activities.