EBK ENGINEERING ECONOMY
17th Edition
ISBN: 9780134838229
Author: Sullivan
Publisher: PEARSON
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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:
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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.)
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Suppose that, for a certain potential investment project, the optimistic, most likely, and pessimistic estimates are as shown in the accompanying table.
Optimistic
$90,000
11 years
$30,000
$36,000
12%
Most Likely
$100,000
7 years
$20,000
$27,000
12%
Capital investment
Useful life
Market value
Net annual cash flow
MARR (per year)
Pessimistic
$122,000
5 years
$0
$18,000
12%
a. What is the AW for each of the three estimation conditions?
b. It is thought that the most critical factors are useful life and net annual cash flow. Develop a table showing the net AW for all combinations of the estimates for these two factors, assuming all other factors to be at
their most likely values.
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year.
Chapter 12 Solutions
EBK ENGINEERING ECONOMY
Ch. 12 - Prob. 1PCh. 12 - Prob. 2PCh. 12 - A new snow making machine utilizes technology that...Ch. 12 - Prob. 4PCh. 12 - Prob. 5PCh. 12 - Prob. 6PCh. 12 - Prob. 7PCh. 12 - Prob. 8PCh. 12 - Prob. 9PCh. 12 - Prob. 10P
Ch. 12 - Prob. 11PCh. 12 - Prob. 12PCh. 12 - Prob. 13PCh. 12 - Prob. 14PCh. 12 - Prob. 15PCh. 12 - Prob. 16PCh. 12 - Prob. 17PCh. 12 - Prob. 18PCh. 12 - Prob. 19PCh. 12 - Prob. 20PCh. 12 - Prob. 21PCh. 12 - Prob. 22PCh. 12 - If the interest rate is 8% per year, what decision...Ch. 12 - Prob. 24PCh. 12 - Prob. 25PCh. 12 - Prob. 26SE
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