A plant engineer wishes to know which of two types of lightbulbs should be used to light a warehouse. The bulbs currently used cost $45.90 per bulb and last 14,600 hours before burning out. The new bulb ($60 per bulb) provides the same amount of light and consumes the same amount of energy but lasts twice as long. The labor cost to change a bulb is $16.00. The lights are on 19 hours a day, 365 days a year. If the firm's MARR is 15%, what is the maximum price (per bulb) the engineer should be willing to pay to switch to the new bulb? (Assume that the firm's marginal tax rate is 40%.)

A plant engineer wishes to know which of two types of lightbulbs should be used to light a warehouse. The bulbs currently used cost $45.90 per bulb and last 14,600 hours before burning out. The new bulb ($60 per bulb) provides the same amount of light and consumes the same amount of energy but lasts twice as long. The labor cost to change a bulb is $16.00. The lights are on 19 hours a day, 365 days a year. If the firm's MARR is 15%, what is the maximum price (per bulb) the engineer should be willing to pay to switch to the new bulb? (Assume that the firm's marginal tax rate is 40%.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

RBMC Industry manufactures a special printing according to customer specifications with respect to the number of sheets the machine can produce per hour. With this, there is a $50 increase in the production rate x. A shop owner is considering buying one of these machines. From his past experiences, the owner estimates that the arrival rate is three per hour and each order averages 500 sheets. Contracts signed by the owner, and the customer says that there will be a penalty of 10$ per late order per hour. It is assumed that the actual production time is exponential. (a) Formulate the cost model as a function of the production rate x. (b) Determine the optimal production rate the owner should specify in his purchase of the machine from RBMC. Hint: Get the derivative of the cost function.
The cost of making a small transistor radio is 23.00 php in labor costs and 37.00 php in material costs. The fixed cost of running the system is P 100,000.00 per month. The variable cost is P1.00 per set. The price of the radio is php75.00 each. Determine how many sets must be produced each month in order to break even.
A strawberry growing company is deciding its production and sale plan for the national and international markets.The sale price for each ton of strawberry depends on the quantity offered in the market. If x1 tons is offered for the domestic market, the sale price will be (30 - x1) CU / ton, while if x2 tons is offered for the international market, the sale price will be (40 - x2) CU / ton.The cost for each ton of strawberry for the domestic market is 10 MUs, while for the international market it is 15 MUs.The company has the capacity to produce up to 10 tons of strawberries for sale and, according to SAG restrictions, it must dedicate at least 10% of its production to the international market.For technical production reasons, the company must additionally satisfy the following restriction: x12 + x22 ≤64.a) Raise the NLP model that allows maximizing the net profit for the companyb) State the KKT conditions for the problem and indicate whether they are necessary and / or sufficient.c)…
A strawberry growing company is deciding its production and sale plan for the national and international markets.The sale price for each ton of strawberry depends on the quantity offered in the market. If x1 tons is offered for the domestic market, the sale price will be (30 - x1) CU / ton, while if x2 tons is offered for the international market, the sale price will be (40 - x2) CU / ton.The cost for each ton of strawberry for the domestic market is 10 MU, while for the international market it is 15 MU.The company has the capacity to produce up to 10 tons of strawberries for sale and according to SAG restrictions, it must dedicate at least 10% of production to the international market.For technical production reasons, the company must additionally satisfy the following restriction: x12 + x22 ≤64.d) There is the option of buying new machinery to increase the production capacity of the company. In what range should the new machine increase production capacity to suit the company? How…
All 4 parts answer need.
The General Store at State University is an auxiliary bookstore located near the dormitories that sells academic supplies, toiletries, sweatshirts andT-shirts, magazines, packaged food items, and canned soft drinks and fruit drinks. The manager of the store has noticed that several pizza deliveryservices near campus make frequent deliveries. The manager is therefore considering selling pizza at the store. She could buy premade frozenpizzas and heat them in an oven. The cost of the oven and freezer would be $27,000. The frozen pizzas cost $3.75 each to buy from a distributorand to prepare (including labor and a box). To be competitive with the local delivery services, the manager believes she should sell the pizzas for$8.95 apiece. The manager needs to write up a proposal for the university's director of auxiliary services. The manager of the store anticipates that once the local pizza delivery services start losing business, they will react by cutting prices. If after a month (30 days)…
2. Oswego Machine Company (OMC) produces 9,000 multipurpose pliers that sell for $9.50 each. Its present cost function is estimated to be: TC = 25,000 + 3.7Q However, OMC is considering renovating its facilities. The new, technologically advanced plant would have an estimated cost function of: TC = 34,000 + 2.5Q The marketing department claims that the demand for the pliers fits a normal distribution with an expected mean value of 14,000 units per year. What are the current TC, TFC, TVC, ATC, and MC? What is the break-even point for both plant designs? Would you be in favor of renovating the plant?
WorldTrans is considering a project that has an up-front cost at t = 0 of $2,700. (All dollars in this problem are in thousands.) The project's subsequent cash flows are critically dependent on whether a competitor's product is approved by the Food and Drug Administration. If the FDA rejects the competitive product, WorldTrans's product will have high sales and cash flows, but if the competitive product is approved, that will negatively impact WorldTrans. There is a 60% chance that the competitive product will be rejected, in which case WorldTrans's expected cash flows will be $750 at the end of each of the next seven years (t = 1 to 7). There is a 40% chance that the competitor's product will be approved, in which case the expected cash flows will be only $50 at the end of each of the next seven years (t = 1 to 7). WorldTrans will know for sure one year from today whether the competitor's product has been approved. WorldTrans is considering whether to make the investment today or to…
A steam boiler is required as part of the design of a new plant. The types of fuel that can be used to ignite the boiler are natural gas, fuel oil, and coal. The cost of installation including all required controls is $40,000 for natural gas, $50,000 for fuel oil, and $120,000 for coal. In addition, the annual cost of fuel oil is $8,000 less than the annual cost of natural gas and $12,000 more than the annual cost of coal. The boiler is to be utilized for 20 years and interest rate is 8%. Using the most suitable approach, determine the best alternative. Is there any other consideration for the obtained result? As one way, please solve using either Cash Flow Analysis, Present Worth Analysis, or any other similar method. As a second way, use Excel software and include all required command statements require to solve it.
A villager estimates that if he picks his orange crop now, he will obtain 2000 boxes ofapples, which he can sell at $5 per box. However, he thinks his crop will increase by 150boxes of apples for each week he delays picking, but that the price will drop at a rate of$0.25 per box per week; in addition, he estimates approximately 30 boxes per week willspoil for each week he delays picking. When should he pick his crop to obtain the largesttotal cash return? How much will he receive for his crop at that time?
Electric posts and transmission lines must be installed in a new industrial park. It has been estimated that 23 km of transmission lines will be needed and each kilometer of line costs P14,000.00 including the installation. In addition a pole must be placed every 100 meters on the average to support the lines, and the cost of the pole and its installation is P2,100.00 including labor. What is the cost of the entire project?
Dennis Odle is the production vice president of Century Electrics Company, a very large manufacturer of printers for computer systems. Each printer uses a fractional horsepower electric motor drive mechanism. Dennis has estimated that the cost of being out of stock for this particular motor is P1,300 for each unit Century is short while the carrying cost for each stock is P650. Using an EOQ model, Dennis has already calculated that the economic order quantity of this motor is 7,200 with an average usage of 60 motors a day. The normal lead time is 10 days. a.How many alternatives for the number of the safety stock do we have? for continuous question:If 0 being the first alternative of the Safety Stock and the highest alternative being the last... b.What is the total annual stockout cost of the first alternative? c.What is the total annual safety stock cost of the last alternative? d.What is the ROP (Lead time demand + Safety stock)?