Basics Of Engineering Economy
2nd Edition
ISBN: 9780073376356
Author: Leland Blank, Anthony Tarquin
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 20P
a:
To determine
Calculate the present worth.
b:
To determine
Calculate the present worth through spreadsheet.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Two methods can be used for producing solar panels for electric power generation. Method 1 will have an initial cost of $550,000, an AOC of $160,000 per year, and $125,000 salvage value after its 3-year life. Method 2 will cost $830,000 with an AOC of $120,000, and a $240,000 salvage value after its 5-year life. Assume your boss asked you to determine which method is better, but she wants the analysis done over a 3-year planning period. You estimate the salvage value of method 2 will be 35% higher after 3 years than it is after 5 years. If the MARR is 10% per year, which method should the company select
In order to provide drinking water as part of its 50-year plan, a west coast city is considering constructing a pipeline for importing water from a nearby community that has a plentiful supply of brackish ground water. A full-sized pipeline can be constructed at a cost of $122 million now. Alternatively, a smaller pipeline can be constructed now for $80 million and enlarged 20 years from now for another $100 million. The pumping cost will be $25,000 per year higher for the smaller pipeline during the first 20 years, but will be approximately the same thereafter. Both pipelines are expected to have the same useful life with no salvage value. (a) At an interest rate of 6% per year, which alternative is more economical? (b) Write the spreadsheet function to display the PW for the smaller pipeline alternative.
Two methods can be used to produce solar panels for electric power generation. Method 1 will have an initial cost of $800,000, an AOC of $150,000 per year, and $125,000 salvage value after its 3-year life. Method 2 will cost $910,000 with an AOC of $125,000 and a $230,000 salvage value after its 5-year life. Assume your boss asked you to determine which method is better, but she wants the analysis done over a three-year planning period. You estimate the salvage value of Method 2 will be 40% higher after three years than it is after five years. If the MARR is 14% per year, which method should the company select?
Which method should the company select?
Chapter 4 Solutions
Basics Of Engineering Economy
Ch. 4 - State two conditions under which the do-nothing...Ch. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7PCh. 4 - Prob. 8PCh. 4 - Prob. 9PCh. 4 - The costs associated with manufacturing a...
Ch. 4 - Prob. 11PCh. 4 - Prob. 12PCh. 4 - Prob. 13PCh. 4 - Prob. 14PCh. 4 - Prob. 15PCh. 4 - Prob. 16PCh. 4 - Prob. 17PCh. 4 - Prob. 18PCh. 4 - Prob. 19PCh. 4 - Prob. 20PCh. 4 - Prob. 21PCh. 4 - Prob. 22PCh. 4 - Prob. 23PCh. 4 - Prob. 24PCh. 4 - Prob. 25PCh. 4 - Prob. 26PCh. 4 - Prob. 27PCh. 4 - Prob. 28PCh. 4 - Prob. 29PCh. 4 - Prob. 30PCh. 4 - Prob. 31PCh. 4 - Two mutually exclusive projects have the estimated...Ch. 4 - Prob. 33PCh. 4 - Prob. 34PCh. 4 - Prob. 35PCh. 4 - Prob. 36PCh. 4 - Prob. 37PCh. 4 - The manager of engineering at the 900-megawatt...Ch. 4 - Prob. 39PCh. 4 - Prob. 40PCh. 4 - Prob. 41PCh. 4 - Three different plans were presented to the GAO by...Ch. 4 - The U.S. Army received two proposals for a turnkey...Ch. 4 - Prob. 44PCh. 4 - Prob. 45PCh. 4 - Prob. 46PCh. 4 - Prob. 47PCh. 4 - Prob. 48PCh. 4 - Prob. 49PCh. 4 - Prob. 50PCh. 4 - Prob. 51PCh. 4 - Prob. 52PCh. 4 - Prob. 53PCh. 4 - Prob. 54PCh. 4 - Prob. 55PCh. 4 - Prob. 56PCh. 4 - Prob. 57PCh. 4 - Prob. 58PCh. 4 - Prob. 59PCh. 4 - Prob. 60PCh. 4 - Prob. 61PCh. 4 - Prob. 62PCh. 4 - Prob. 63APQCh. 4 - Prob. 64APQCh. 4 - Prob. 65APQCh. 4 - Prob. 66APQCh. 4 - Prob. 67APQCh. 4 - Prob. 68APQCh. 4 - Prob. 69APQCh. 4 - Prob. 70APQCh. 4 - Prob. 71APQ
Knowledge Booster
Similar questions
- In order to provide drinking water as part of its 50-year plan, a west coast city is considering constructing a pipeline for importing water from a nearby community that has a plentiful supply of brackish ground water. A full-sized pipeline can be constructed at a cost of $125 million now. Alternatively, a smaller pipeline can be constructed now for $85 million and enlarged 20 years from now for another $90 million. The pumping cost will be $25,000 per year higher for the smaller pipeline during the first 20 years, but it will be approximately the same thereafter. Both pipelines are expected to have the same useful life with no salvage value At an interest rate of 11% per year The present worth of the full-sized pipeline is determined to be what and that of the small-sized pipeline is what Which pipeline is the most economical pipelinearrow_forwardThe sheriff of Los Lunas county along the Arizona- Mexico border asked the county to build a new minimum security detention facility for personscaught while attempting to enter the United States illegally. The construction cost will be $22 million, with annual operating costs of $2.1 million. The new facility will create jobs that produce benefits for many local businesses including realtors, restaurants, etc. The benefits are estimated to be $5 million in years 1 and 2, $2.8 million in year 3, and $1.12 million per year beginning in year 4 and continuing through the 30-year life of the facility. At a discount rate of 8% per year, does the conventional B/C ratio indicate that the project is economically justified?arrow_forwardThe Texas Department of Transportation (TxDOT) is considering two designs for crash barriers along a reconstructed portion of I-10. Design 2B will cost $3 million to install and $125,500 per year to maintain. Design 4R will cost $3.7 million to install and $55,000 per year to maintain. Determine which design should be selected based on a rate of return analysis if TxDOT uses a MARR of 6% per year and a 20-year project period. The rate of return is Not attempted ______%.arrow_forward
- The Texas Department of Transportation (TxDOT) is considering two designs for crash barriers along a reconstructed portion of I-10. Design 2B will cost $3 million to install and $142,500 per year to maintain. Design 4R will cost $3.7 million to install and $55,000 per year to maintain. Determine which design should be selected based on a rate of return analysis if TxDOT uses a MARR of 6% per year and a 20-year project period. The rate of return is __ % Design __ is selected.arrow_forwardThe U.S. Army received two proposals for a turnkey design/build project for barracks for infantry unit soldiers in training. Proposal A involves an off-the-shelf “bare-bones” design and standard grade construction of walls, windows, doors, and other features. With this option, heating and cooling costs will be greater, maintenance costs will be higher, and replacement will occur earlier than proposal B. The initial cost for A will be $750,000. Heating and cooling costs will average $6000 per month with maintenance costs averaging $2000 per month. Minor remodeling will be required in years 5, 10, and 15 at a cost of $150,000 each time in order to render the units usable for 20 years. They will have no salvage value. Proposal B will include tailored design and construction costs of $1.1 million initially with estimated heating and cooling costs of $3000 per month and maintenance costs of $1000 per month. There will be no salvage value at the end of the 20-year life. Which proposal should…arrow_forwardEP Electric has identified two new methods to treat its cooling water. Alternative I (for inflow) would treat the raw water with a conventional reverse osmosis system so that the cycles of concentration could be increased from 5 to 20. This will result in water cost savings of $360,000 per year and chemical cost savings of $56,000 per year. The initial cost of the equipment will be $2.3 million with an operating cost of $125,000 per year. Alternative B (for blowdown) will treat the cooling tower blowdown water using a highpressure seawater reverse osmosis system to recover most of the water that is sent to an evaporation pond. This option will result in water savings of $270,000 per year. The cost of the system will be $1.2 million with an operating cost of $105,000 per year. Assuming one of the two methods must be installed, determine which is preferred on the basis of the incremental ROR value using MARR of 5% per year, which is a typically low return expected of government projects.…arrow_forward
- Two methods can be used for producing expansion anchors. Method A costs $80,000 initially and will have a $15,000 salvage value after 3 years. The operating cost with this method will be $30,000 per year. Method B will have a first cost of $120,000, an operating cost of $8000 per year, and a $40,000 salvage value after its 3-year life. At the MARR of 12% per year, which method should be used on the basis of a present worth analysis?arrow_forwardA process can be completed using either Alternative X or Y, where Y is an automated version of X. Alternative X has fixed costs of $10,000 per year with a variable cost of $50 per unit. If the process is automated, the fixed cost for Y will be $5,000 per year and its variable cost will be only $30 per unit. The minimum number of units that must be produced each year for alternative Y to be favored is closest to:a. Alternative Y will be favored for any level of productionb. 125c. 375d. Alternative X will be favored for any level of productionarrow_forwardUPS Freight plans to spend $100 million on new long-haul tractor-trailers. Some of these vehicles will include a new shelving design with adjustable shelves to transport irregularly sized freight that requires special handling during loading and unloading. Though the life is relatively short, the director wants a capitalized cost analysis performed on the two final designs. Compare the alternatives at the MARR of 10% per year using (a) tabulated factors, and (b) a spreadsheet.arrow_forward
- A window frame manufacturer is searching for ways to improve revenue from its triple-insulated sliding windows, sold primarily in the far northern areas of the United States. Alternative A is an in- crease in TV and radio marketing. A total of $300,000 spent now is expected to increase revenue by $60,000 per year. Alternative B requires the same investment for enhancements to the in-plant manufacturing process that wil improve the temperature retention properties of the seals around each glass pane. New revenues start slowly for this alternative at an estimated $10,000 the first year, with growth of $15,000 per year as the improved product gains reputation among builders. The MARR is 8% per year and the maximum projection period is 10 years for either alternative.arrow_forwardWhich is the most efficient analysis method we can use for determining project acceptability on an economic basis?arrow_forwardWhat is meant by the term equal service alternative?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education