The purchase price of a natural gas-fired commercial boiler (capacity X) was $181,000 eight years ago. Another boiler of the same basic design, except with capacity 1.42X, is currently being considered for purchase. If it is purchased, some optional features presently costing $28,000 would be added for your application. If the cost index was 162 for this type of equipment when the capacity X boiler was purchased and is 221 now, and the applicable cost capacity factor is 0.8, what is your estimate of the purchase price for the new boiler

The purchase price of a natural gas-fired commercial boiler (capacity X) was $181,000 eight years ago. Another boiler of the same basic design, except with capacity 1.42X, is currently being considered for purchase. If it is purchased, some optional features presently costing $28,000 would be added for your application. If the cost index was 162 for this type of equipment when the capacity X boiler was purchased and is 221 now, and the applicable cost capacity factor is 0.8, what is your estimate of the purchase price for the new boiler

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter9: Applications Of Cost Theory

Section: Chapter Questions

Problem 5E

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The purchase price of a natural gas-fired commercial boiler (capacity X) was $177,000 eight years ago. Another boiler of the same basic design, except with capacity 1.42 X is currently being considered for purchase. If it is purchased, some optional features presently costing $28,000 would be added for your application. If the cost index was 169 for this type of equipment when the capacity X boiler was purchased and is 220 now, and the applicable cost capacity factor is 0.8, what is your estimate of the purchase price for the new boiler?
Five years ago, when the relevant cost index was 135, a nuclear centrifuge cost $32,000. The centrifuge had a capacity of separating 1250 gallons of ionized solution per hour. Today, it is desired to build a centrifuge with capacity of 3500 gallons per hour, but the cost index now is 270. Assuming a power-sizing exponent to reflect economies of scale, x, of 0.72, use the power-sizing model to determine the approximate cost (expressed in today’s dollars) of the new reactor.
The delivered equipment cost for setting up a production and assembly line for high-sensitivity, gas-damped accelerometers is $650,000. If the direct cost and indirect cost factors are 1.36 and 0.31, respectively, and both factors apply to delivered equipment cost, the total plant cost estimate is approximately:a. $2,034,500b. $1,735,500c. $1,384,500d. $1,183,000
Equipment necessary to manufacture adjustable ball-lock pins for pulling two components together had a cost of $185,000 when the FRED Equipment Cost Index was 210.0. What was the estimated cost of a similar system in 2015 when the index value was 245.9?
Eight years ago when the relative cost index was 60, a 10 MW power generation facility cost $5M to build. Today the cost index is 110. What would the cost be to produce a 25MW facility today if the power sizing factor is 0.6?
Six years ago, an 80-kW diesel electric set cost $160,000. The cost index for this class of equipment six years ago was 187 and is now 194. The cost capacity factor is 0.6. Solve, a. The plant engineering staff is considering a 120-kW unit of the same general design to power a small isolated plant. Assume we want to add a precompressor, which (when isolated and estimated separately) currently costs $18,000. Determine the total cost of the 120-kW unit. b. Estimate the cost of a 40-kW unit of the same general design. Include the cost of the $18,000 precompressor.
Six years ago, an 80-kW diesel electric set cost $150,000. The cost index for this class of equipment six years ago was 181 and is now 194.The cost-capacity factor is 0.5. a. The plant engineering staff is considering a 120-kW unit of the same general design to power a small isolated plant. Assume we want to add a precompressor, which (when isolated and estimated separately) currently costs $17,500. Determine the total cost of the 120-kW unit. b. Estimate the cost of a 50-kW unit of the same general design. Include the cost of the $17,500 precompressor.
Pipes R Us has designed a pipeline that provides a throughput of 70,000 gallons of water per 24-hour period. If the diameter of the pipeline were increased by 1 inch, throughput would increase by 4,000 gallons per day. Alternatively, throughput could be increased by 6,000 gallons per day using the original pipe diameter with pumps that had 100 more horsepower. a. Estimate the marginal rate of technical substitution between pump horsepower and pipe diameter. b. Assuming the cost of additional pump size is $6 per each unit of horsepower and the cost of larger diameter pipe is $200 per inch, does the original design exhibit the property required for optimal input combinations? Why or why not?
The cost of an electrode position control system in an electric arc furnace was $16,000 when the applicable equipment cost index had a value of 1192. If the current index value is 1364 and the exponent in the cost-capacity equation has a value of 0.65, the estimated cost now of a similar system twice as large is closest to: (a) $17,465 (b) $21,545 (c) $28,730 (d) $36,130
A mini-wind tunnel for calibrating vane or hotwire anemometers costs $3750 in 2011 when the Marshall and Swift (M&S) equipment cost index value was 1490.2. If True-Tech Instruments estimated the cost of a wind tunnel twice as large to be $10,200 in 2016, what did it expect the equipment cost index value to be, provided the equipment cost increased accordingly? The cost-capacity equation exponent is 0.89.
If the cost of an 8000-operation-per-second assembly line robot is $80,000 and the cost for one with twice the capacity is $120,000, the value of the exponent in the cost-capacity equation is closest to:a. 0.51b. 0.58c. 0.62d. 0.69
Company “A” has fixed expenses of P10000 per month and each unit of product has a variable cost of P0.02, while company “B” has fixed expenses of P2200 per month and can produce the same unit of product at 0.05 variable cost. At what number of units of annual production will company “A” have the same overall cost as company “B”?