Engineering Economy
Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
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Chapter 12, Problem 18P
To determine

Calculate the probability.

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Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: a. If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? b. Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?
Fisher Publishing Inc. is doing a financial feasibility analysis for a new book. Editing and preproduction costs are estimated at $45,000. The printing costs are a flat $7000 for setup plus $8.00 per book. The author's royalty is 8% of the publisher's selling price to bookstores. Advertising and promotion costs are budgeted at $8000. a. If the price to bookstores is set at $35, how many books must be sold to break even? (Round the answer up to the nearest whole number.) b. The marketing department is forecasting sales of 4800 books at the $35 price. What will be the net income from the project at this volume of sales?
A copper wire has a material cost that varies proportionally with the cross-sectional area (A) according to the expression $40,000 A. This wire has a lifetime of 30 years and a salvage value of $1500 A at that time. As the cross-sectional area of the wire increases, the resistance of the wire decreases such that the energy losses in the wire also decrease. The costs of these energy losses vary indirectly with the cross-sectional area according to the expression $70,000/A. Assuming an interest of 9%, what is the optimal value for this cross-sectional area? (Chapter 6- Annual Equivalent Worth Analysis)
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