Chapter 18, Problem 10RQ

Interpret the objectives of life-cycle costing and discuss the importance of determining building’s life-cycle costs. In your own understanding and make it short.

How are the field cost indexes derived?

A 10 million project was awarded to an engineer. His target profit was 15% of the awarded project. To fund his project, he went to a bank to borrow money. The bank has a loan arrangement with a 12% interest rate annually. How much money will an engineer loan in the bank?

Long-term contracts?   Multiple Choice increase transaction costs. reduce incentives for specialized investments. can reduce opportunistic behavior. increase transaction costs and increase opportunism.

Cost estimation plays a vital role in the success of any project. Explain the different tools and techniques due to which the process of cost estimation takes place.

What are the benefits of the forwarding the pricing change orders?

What are the components of work to which cost information are required by every estimator?

An enterprising engineer purchases a second hand truck for ₱78,000. Payment was made by an immediate cash payment of ₱5,000 and then 12-month-end payments of ₱6,486 each. Another dealer offered to finance the same purchase at an interest rate of ¾ % per month on the unpaid balance. Which offer is better & why?

1. A project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $50,000; maintenance costs that start at $5,000 at the end of year (EOY) 1 and increase by $1,000 for each of the next 4 years, and then remain constant for the following 5 years; savings of $20,000 per year (EOY 1-10); and finally a resale value of $35,000 at the EOY 10. If the project has a 10-year life and the firm's MARR is 10% per year, what is the present worth of the project? Is it a sound investment opportunity? 2. A toll bridge across the Mississippi River is being considered as a replacement for the current 1-40 bridge linking Tennessee to Arkansas. Because this bridge, if approved, will become a part of the U.S. Interstate Highway system, the B-C ratio method must be applied in the evaluation. Investment costs of the structure are estimated to be $17,500,000 and $325,000 per year in operating and maintenance costs are anticipated. In addition, the bridge…