Engineering Economy Plus NEW MyLab Engineering with Pearson eText -- Access Card Package (16th Edition)
16th Edition
ISBN: 9780133750218
Author: William G. Sullivan; Elin M. Wicks; C. Patrick Koelling
Publisher: PEARSON
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Chapter 1, Problem 7P
A large electric utility company has proposed building an $820 million combined cycle, gas-powered plant to replace the electric generation capacity at one of its coal-fired facilities. Develop three other alternatives for replacing this electric generation capacity.
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Consider the following two mutually exclusive service projects with projectlives of three years and two years, respectively. (The mutually exclusive service projects will have identical revenues for each year of service.) The interest rate is known to be 12%. Net Cash Flow End of Year Project A Project B 0 -$1,000 -$800 1 -400 -200 2 -400 -200+0 3 -400+200
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Your company is considering a new computer system with an initial cost of $1 million. When implemented, the system will save $300,000 per year in inventory and administration costs. The system has a service life of five years and is classified in the three-year MACRS category. At the end of the fifth year, its residual value was estimated at $50,000. The system has no impact on net working capital. The marginal tax rate is 40 per cent. The required rate of return is 8 per cent.
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Engineering Economy Plus NEW MyLab Engineering with Pearson eText -- Access Card Package (16th Edition)
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