EBK ENGINEERING ECONOMY
EBK ENGINEERING ECONOMY
16th Edition
ISBN: 9780133819014
Author: Koelling
Publisher: YUZU
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Chapter 11, Problem 30FE
To determine

Calculate the maximum acceptable cost.

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You are about to buy a piece of equipment (machine Alpha) for a project. The initial cost is $500,000 and the annual maintenance costs is $15,000. Another company offers you a second option (Machine Beta) for which the annual maintenance cost is $20,000. What is the maximum price (the initial cost) you would be willing to pay for the second option? Both machines have the same useful life of 11 years and the difference between their performances is negligible. Assume an annual interest rate of 4%. $767,524 $667,197 $456,197 $567,524
The purchase of a used pick-up truck for $9,000 is being considered. Records for other vehicles show that costs for oil, tires, and repairs roughly equal the cost for fuel. Fuel costs are $990 a year if the truck is driven 16,000 km. The salvage value after five years of use drops by $0.05 per km. Find the equivalent uniform annual cost if the discount rate is 8%. How much does this change if the annual mileage is 24,000 km? 8,000 km? Assume that, drop in Salvage Value is based on total kilometers driven, rather than the annual distance driven.
A car is needed for three years. Plans A and B for acquiring the car are being evaluated. An effective annual interest rate of 10% is to be used. Which plan is economically superior?   Plan A: Lease the car for $0.25/mile (all inclusive)   Plan B: Purchase the car for $30,000. Keep the car for three years. Sell the car after three years for $7200. Pay $0.14 per mile for oil and gas. Pay other costs of $500 per year.
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