being evaluated: Method A. Dig a ditch. The first cost would be $60,000, and $25,000 of redigging and shaping would be required at five-year intervals forever. Method B. Lay concrete pipe. The first cost would be $150,000, and a replace- ment would be required at 50-year intervals at a net cost of $180,000 forever.

being evaluated: Method A. Dig a ditch. The first cost would be $60,000, and $25,000 of redigging and shaping would be required at five-year intervals forever. Method B. Lay concrete pipe. The first cost would be $150,000, and a replace- ment would be required at 50-year intervals at a net cost of $180,000 forever.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.11P

See similar textbooks

Similar questions

I want you to provide me the Cash Flow diagram of the problem. Only cash flow diagram, the solution is already there. Thanks in advance! The annual estimated cash flow is $140,000. The salvage value will be 12% of the initial price after 5 years. The discount rate (r) is 18% Let us assume the initial price of the doughnut machine be X. PV of cash inflows=PV of cash outflows$140,000×PVAF4,18%+.12X×PVF5,18%=X$140,000×2.69006180465+.12X×0.43710921621=X$376,608.652651=X-0.05245310594$376,608.652651=0.94754689406XX=$397,456.479475 The maximum purchase price of the doughnut machine is $397,456.48.
The city of Jefferson is reviewing the benefits and costs of a potential universal water-metering program. Two options are considered:• Option I: Treated Surface Water Only Benefits of Deferring/DownsizingWater and Sewer Projects-$28.l millionCosts of Metering-$9.3 million Benefit-Cost Ratio-3.02• Option 2: Treated Surface Water Supplemented By 40 MUDay Groundwater Benefits of Deferring/Downsizing Water and Sewer Projects-$38.9 millionCosts of Metering (and groundwater development)-$14.7 millionBenefit-Cost Ratio-2.65 Which option should the city implement, assuming that the city has enough money to fund either project?(a) Option 1.(b) Option 2.(c) Neither.( d) Both options.
These data were derived from a forest inventory and are to be used to calculate the best (most revenue return) rotation. The manager wishes to maximize net income and has the following information: Establishment Costs: $175/acre Thinning and burning at age 17 cost: $75 Stumpage sells for: $41/unitvol MAR: 6.7% Annual Expenses: $8/acre Inventory Data over Life of the Forest Stand (Ages 0-60 years) Stand age (vol/acre) 15 5.13 20 13.98 25 25.22 30 35.11 35 44.19 40 51.85 45 56.79117447 50 63.03092644 55 68.76322479 60 74.05934015
Calculation question: Suppose the following data accurately estimates the costs and benefits you outlined in #1. Calculate NPV assuming a discount rate of 4%. Should ISU invest in this project? Year Costs Benefits 0 1000 400 1 200 500 2 200 500 3 200 500
Gooey Bites sells snack packs for $3 per pack. Variable expenses involved in producing snack packs are estimated to be $1 per pack and fixed costs for operating the production line are estimated to be $14,000. How many snack packs must Gooey Bites sell to break even? a. 14,000 b. 3,500 c. 4,667 d. 7,000
1) Calculate the payback period, the discounted payback period and the NPV for the following project using a rate of 5%. Time Cash Flow 0 - $63,000 1 - $ 21,000 2 - $ 21,000 3 - $ 21,000 4 - $ 21,000 Payback = Discounted Payback =
11 - Which of the following statements about Engineering Economics is false?A) Engineering Economics requires knowledge of cost management.B) NoneC) Engineering Economy means producing the best quality product/service at the most affordable price.D) Engineering Economics means being able to calculate profit and loss on investments.E) Engineering Economics means making cost-benefit calculations.
12-A customer has asked your company to prepare a bid on supplying 1000 units of a new product. Production will be in batches of 100 units. You estimate that costs for the first batch of 100 units will average OMR 200 a unit. You also expect that a 90% learning curve will apply to the cumulative labour cost on this contract. Estimate the incremental labour cost of extending the production run to produce an additional 1000 units. a. None of the given options b. OMR 52490 c. OMR 55500 d. OMR 60000
During your first month as an employee at Engro. Industries (a large drill-bit manufacturer),you are asked to evaluate alternatives for producing a newly designed drill bit on a turningmachine. Your boss’ memorandum to you has practically no information about what thealternatives are and what criteria should be used. The same task was posed to a previousemployee who could not finish the analysis, but she has given you the following information:An old turning machine valued at $350,000 exists (in the warehouse) that can be modified forthe new drill bit. The in-house technicians have given an estimate of $40,000 to modify thismachine, and they assure you that they will have the machine ready before the projected startdate (although they have never done any modifications of this type). It is hoped that the oldturning machine will be able to meet production requirements at full capacity. An outsidecompany, Descon Engg. Inc., made the machine seven years ago and can easily do the…
2.4.1 Total Cost in Material SelectionIn many cases, economic selection among materials cannot be based solely on the costs ofmaterials. Frequently, a change in materials will affect the design and processing costs, and shipping costsmay also be altered.Care should be taken in making economic selections between materials to ensure that anydifferences in shipping costs, yields, or resulting scrap are taken into account. Commonly, alternativematerials do not come in the same stock sizes, such as sheet sizes and bar lengths. This may considerablyaffect the yield obtained from a given weight of material. Similarly, the resulting scrap may differ forvarious materials.In addition to deciding what material a product should be made of, there are often alternativemethods or machines that can be used to produce the product, which, in turn, can impact processingcosts. What could be the factors affecting the cost of materials that one should consider?
True or false 3.3 the strength of water transportation is high investment cost.
A library shelving system has a first cost of $20,000 and a useful life of 10 years. The annual maintenance is expected to be $2,500. The annual benefits to the library staff are expected to be $9,000. If the effective annual interest rate is 10%, what is the benefit-cost ratio of the shelving system? a. 1.51 b. 2.24 c. 1.73 d. 1.56.