ENGINEERING ECONOMY DIGITAL ACCESS
ENGINEERING ECONOMY DIGITAL ACCESS
8th Edition
ISBN: 9781259676819
Author: Blank
Publisher: MCG
Question
Chapter 1, Problem 3P
To determine

Measure of worth.

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Sebastian is about to compare a set of mutually exclusive and indivisible alternatives using a ranking approach. Which of the following is not an appropriate measure of worth? a. Present worth b. Annual worth c. Future worth d. Internal rate of return
An item is purchased for P100 000. Annual cost is P 16 000. Using 8%, what is the capitalized cost of perpetual service?
To choose the best alternative among the given alternatives in the annual cash flow analysis method, it is necessary to compute the EUAW for each alternative over a period of one cycle only. True / False
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  • Concurris Prototyping is committed to using the newest and finest equipment in its labs. Accordingly, Wilma, a senior engineer, has recommended that a 2-year-old piece of precision measurement equipment be replaced immediately. She believes it can be demonstrated that the proposed equipment is economically advantageous at a 15%-per year return and a planning horizon of 5 years. Perform the replacement analysis using the annual worth method, a 5-year study period, and the estimates below. Was Wilma correct? Equipment Current Proposed Original purchase price, $ −30,000 −36,000 Current market value, $ 15,000 -- Remaining life, years 5 15 Estimated value in 5 years, $ 7,000 10,000 Salvage value after 15 years, $ -- 5,000 AOC, $ per year −7,000 −3,000   The AW of the defender is $−  and the AW of the challenger is $−  .   Wilma         (Click to select) is is not  correct.
    Why the annual worth value give you the same exact value for the repeated period? (Why only the annual worth method will give you a value for one period and it will equal the same exact value for the repeated periods?)
    A municipal bond with a face value of $10,000 was issued today with an interest rate of 6% per year payable semiannually. The bond matures 20 years from now. If an investor paid $9,000 for the bond and holds it to maturity, all of the following equations will yield the correct semiannual rate of return except: (a) 0 = −9000 + 300(P/A,i*,40) + 10,000(P/F,i*,40) (b) 0 = −9000(F/P,i*,40) + 300(F/A,i*,40) + 10,000 (c) 0 = −9000(A/P,i*,40) + 300 + 10,000(A/F,i*,40) (d) 0 = −9000 + 600(P/A,i*,40) + 10,000(P/F,i*,40)
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