EBK BASICS OF ENGINEERING ECONOMY
2nd Edition
ISBN: 8220102797123
Author: Blank
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 14P
To determine
Selection of the project.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A company is considering three pieces of equipment. Equipment A has a first cost of $80,000, AOC of $20,000, and a salvage value of $19,000 after 3 years. Equipment B will cost $210,000 with an AOC of $35,000 and a salvage of $40,000 after 9 years, and Equipment C has the first cost of S150,000 with an AOC of $28,000 and a salvage value of 30,000 after 6 years
Which equipment should the company select at an interest rate of 10% per year?
EP 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.…
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?
Chapter 5 Solutions
EBK BASICS OF ENGINEERING ECONOMY
Ch. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10P
Ch. 5 - Two machines with the following cost estimates are...Ch. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Estimates have been presented to Holly Farms,...Ch. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - A major repair on the suspension system of Janes...Ch. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32APQCh. 5 - Prob. 33APQCh. 5 - Prob. 34APQCh. 5 - Prob. 35APQCh. 5 - Prob. 36APQCh. 5 - The AW values of three revenue alternatives are ...Ch. 5 - Prob. 38APQCh. 5 - Prob. 39APQCh. 5 - Use an interest rate of 10% per year. The...Ch. 5 - Prob. 41APQCh. 5 - Prob. 42APQ
Knowledge Booster
Similar questions
- Two options are available for setting up a wireless meter scanner and controller. A simple setup is good for 2 years and has an initial cost of $14,000, no salvage value, and an AOC of $27,000 per year. A more permanent system has a higher first cost of $73,000, but it has an estimated life of 6 years and a salvage value of $15,000. It costs only $14,000 per year to operate and maintain. If the two options are compared using an incremental rate of return, what is the incremental cash flow in year 6? The incremental cash flow in year 6 is $arrow_forwardA company that manufactures amplified pressure transducers wishes to decide between the machines shown—variable speed (VS) and dual speed (DS). Compare them on the basis of rate of return and determine which should be selected if the MARR = 15% per year. VS DS First cost, $ −250,000 −225,000 AOC, $ per year −231,000 −235,000 Overhaul in year 3, $ — −26,000 Overhaul in year 4, $ −39,000 — Salvage value, $ 50,000 10,000 Life, years 6 6arrow_forwardTo make an item in-house, equipment costing $250,000 must be purchased. It will have a life of 4 years, annual operating cost of $80,000, and each unit will cost $40 to manufacture. Buying the item externally will cost $100 per unit. At i=15% per year, at what number of units needed per year will it be more economical to produce the item in-house? Using Breakeven Analysis, pls solve the problemarrow_forward
- Two processes can be used for producing a new engine. Process A will have a first cost of P750,000, an operating cost of P60,000 per year, and a salvage value of P80,000 after its 2-year life. Process B will have a first cost of P1,350,000, an operating cost of P25,000 per year, and a P120,000 salvage value after its 4-year life. Process B will also require updating at the end of year 2 at a cost of P90,000. On the basis of a future worth analysis at an interest rate of 12% per year, write the ANSWER for ALTERNATIVE A: ____ ANSWER for ALTERNATIVE B: ____arrow_forwardTwo processes can be used for producing a new engine. Process A will have a first cost of P750,000, an operating cost of P60,000 per year, and a salvage value of P80,000 after its 2-year life. Process B will have a first cost of P1,350,000, an operating cost of P25,000 per year, and a P120,000 salvage value after its 4-year life. Process B will also require updating at the end of year 2 at a cost of P90,000. On the basis of a future worth analysis at an interest rate of 12% per year, write the ANSWER for ALTERNATIVE A: Blank 1 ANSWER for ALTERNATIVE B: Blank 2arrow_forwardBecause of international competition, a company that manufactures high-speed submersible rotary indexing spindles must upgrade its production equipment to reduce costs over a 6-year planning horizon. The company can invest $80,000 one year from now, 2 years from now, or 3 years from now. Depending on when the investment is made, the savings will vary. That is, the savings will be $29,000, 34,000, or $38,000 per year if the investment is made 1, 2, or 3 years from now, respectively. Will the timing of the investment affect the request to make at least 20% per year return? Use future worth analysis and solve using factors. (Click to select) No Yes , the timing of the investment (Click to select) will not will affect the request to make at least 20% per year return. The investment must be made in (Click to select) 3 2 1 years.arrow_forward
- Because of international competition, a company that manufactures high-speed submersible rotary indexing spindles must upgrade its production equipment to reduce costs over a 6-year planning horizon. The company can invest $80,000 one year from now, 2 years from now, or 3 years from now. Depending on when the investment is made, the savings will vary. That is, the savings will be $20,000, 25,000, or $38,000 per year if the investment is made 1, 2, or 3 years from now, respectively. Will the timing of the investment affect the request to make at least 20% per year return? Use future worth analysis and solve using factors. Please provide excel formula.arrow_forwardThe AW values of three cost alternatives are $−23,000 for alternative A, $−21,600 for B, and $−27,300 for C. On the basis of these results, the decision is to: (a) select alternative A (b) select alternative B (c) select alternative C (d) select the Do Nothing alternativearrow_forwardA 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_forward
- Process A has a fixed cost of $190,000 per year and a variable cost of $58 per unit. For Process B,10 units can be produced in 1 day at a cost of $140. If the company's MARR is 10%per year, what will be annual fixed cost have to be for Process B in order for the two alternatives to have the same annual total cost at a production rate of 2750 units per year? The annual fixed cost for process B in order for the two alternatives to have the same annual total cost is determined to be $□.arrow_forwardTwo 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 selectarrow_forwardThe production manager on the Ofon Phase 2 offshore platform operated by Total S.A. must purchase specialized environmental equipment or an equivalent service. The first cost is $250,000 with an AOC of $76,000. The manager has let it be known that he does not care about the salvage value because he thinks it will make no difference in the decision-making process. His supervisor estimates the salvage might be as high as $100,000 or as low as $10,000 in 3 years, at which time the equipment will be unnecessary. Alternatively, a subcontractor can provide the service for $215,000 per year. The total offshore project MARR is 13% per year. Determine if the decision to buy the equipment is sensitive to the salvage value. The annual worth of high salvage value is $ . The annual worth of low salvage value is $ . Decision is _____ to salvage value. (Sensitive/ Not Sensitive)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