Contemporary Engineering Economics Plus MyLab Engineering with eText -- Access Card Package (6th Edition)
6th Edition
ISBN: 9780134162690
Author: Chan S. Park
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 5, Problem 58P
(a):
To determine
Calculate the present worth.
(a):
To determine
Calculate the interest rate.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Assume you own a copper mine. The mine has total known reserves of 500 (million metric tons). The market demand for the copper is estimated to be: P = -1.75Q + 1000 and the marginal cost curve is estimated to be: P = 1.25Q + 100.
What is the efficient quantity of copper to extract if you need only consider the current period in your decision making?
Assume you need to consider allocation of the mine’s resources across two periods of time—the present and the future. Assume the “future” period is 10 years from the present and you use a discount rate 7.5%. What would be the efficient (inter-temporal) allocation of the mine’s resources in each period?
What would be the price in each period if demand is constant across time?
An aggressive investment in Industry 4.0 next-generation technology has the potential to save your company $7M if it is very successful, or $3M if it is moderately successful, but it will cost $2M if it fails. The relative risk for the project is $1.25M. The company has a risk tolerance of $1 million and has assigned a utility value of .777 based on an exponential utility function for this investment. What is the value of a safe investment that the company would just as soon choose rather than investing in the IT project?
A. $2M
B. $1.5M
C. 52.75
D. $1.25M
Ahlia Co specializes in the production of a range of air conditioning appliances for industrial premises. It is about to launch a new product, the 'Energy Buster', a unique air conditioning unit which is capable of providing unprecedented levels of air conditioning using a minimal amount of electricity. The technology used in the Energy Buster is unique so Ahlia Co has patented it so that no competitors can enter the market for two years. The company's development costs have been high and it is expected that the product will only have a five-year life cycle.
Ahlia Co is now trying to ascertain the best pricing policy that they should adopt for the Energy Buster's launch onto the market. Demand is very responsive to price changes and research has established that for every $15 increase in price, demand would be expected to fall by 1,000 units. If the company sets the retail price at $735, only 1,000 units would be demanded.
The costs of producing each air conditioning unit are as…
Chapter 5 Solutions
Contemporary Engineering Economics Plus MyLab Engineering with eText -- Access Card Package (6th Edition)
Ch. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - If a project costs 100,000 and is expected to...Ch. 5 - Refer to Problem 5.2, and answer the following...Ch. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Consider the cash flows from an investment...Ch. 5 - Prob. 10P
Ch. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Consider the project balances in Table P5.19 for a...Ch. 5 - Your RD group has developed and tested a computer...Ch. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Geo-Star Manufacturing Company is considering a...Ch. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 37PCh. 5 - Prob. 38PCh. 5 - Prob. 39PCh. 5 - Prob. 40PCh. 5 - Prob. 41PCh. 5 - Prob. 42PCh. 5 - Two methods of carrying away surface runoff water...Ch. 5 - Prob. 44PCh. 5 - Prob. 45PCh. 5 - Prob. 46PCh. 5 - Prob. 47PCh. 5 - Prob. 48PCh. 5 - Prob. 49PCh. 5 - Prob. 50PCh. 5 - Prob. 51PCh. 5 - Prob. 52PCh. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - Prob. 55PCh. 5 - Prob. 56PCh. 5 - Prob. 57PCh. 5 - Prob. 58PCh. 5 - Prob. 59PCh. 5 - Prob. 1STCh. 5 - Prob. 2ST
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- Sunshine Smoothies Company (SSC) manufactures and distributes smoothies. It is considering the "weight loss" smoothies project. The project would require a $4 million investment outlay today The after-tax cash flows would depend on consumers’ demand. There is a 30% chance that demand will be good, and the project will produce after-tax cash flows of $2 million at the end of each year for the next 3 years. There is a 70% chance that demand will be poor, and the project will produce after-tax cash flows of $1 million at the end of each year for the next 3 years. The project is riskier than the firm's other projects, so it has a WACC of 12%. - The firm will know whether the project is success or not after receiving first year's cash flows from normal operating.. - After receiving the first year's cash flows (no matter what receive $1M or $2M in the first year), the firm will have the option to abandon the project. - If the firm decides to abandon the project, the company will no longer…arrow_forwardA firm must decide whether to construct a small, medium or large stamping plant. A consultant’s report indicates a 0.20 probability that demand will be low and 0.80 that demand will be high. If the firm builds a small facility and demand turns out to be low, the Net Present Value (NPV) will be $42M. If demand turns out to be high, the firm can either subcontract and realize the NPV of $42M or expand greatly for a Net Present Value of $48M. The firm could build a medium-size facility as a hedge: if demand turns out to be low, its NPV is estimated at $22M; if demand turns out to be high, the firm could do nothing and realize a NPV of $46M, or could expand and realize a NPV of $50M. If the firm builds a large facility and demand is low, the NPV will be ($20M), whereas high demand will result in a NPV of $72M. Analyze and solve this problem using a decision tree What is the Maximin Alternative and Compute the EVPIarrow_forwardPlant Design is a major requirement for you to be able to graduate BS ChE in Batangas State University. Suppose you are a panelist, and you must evaluate if the design is feasible or not. You look at the breakdown of expenses, possible revenues, etc. Here are some important chapters and discussions taken from a certain plant design. Chapter 3: Market Study This plant design, entitled “IIVSDROP: The First Ear Dropper Solution Manufacturing Plant in the Philippines” considers a 30-year period of study, starting 2021, after finishing its construction by 2020. All projections, and interest rates set by the company shall be evaluated within this 30-year period. The inflation rate shall not be included in the computation and a minimum attractive rate of return is set at 20%. Chapter 4: Products Our company produces ear dropper solution which can be sold for PHP. 125.00 per bottle. Annually, the company can produce 1000 pallets of the product. Each pallet is stacked with 14 layers and each…arrow_forward
- Dupont is considering licensing a low liquid discharge (LLD) water treatment system from a small company that developed the process and owns the license. Dupont can purchase a 1-year option for $100,000 that will provide time to pilot test the LLD process or Dupont can acquire the license now at a cost of $1.8 million plus 25% of sales paid annually to the license owner. If they wait 1 year, the cost will increase to $1.9 million plus 30% of sales paid annually. If sales are estimated to be $1,000,000 per year over the 5-year license period, should Dupont purchase the license now or purchase the option now and possibly license it after the 1-year test period? Assume the MARR is 15% per year.arrow_forwardYou are considering a luxury apartment building project that requires an investment of $14,500,000. The building has 60 units. You expect the maintenance cost for the apartment building to be $450,000 the first year and $490,000 the second year. The maintenance cost will continue to increase by $40,000 in subsequent years. The cost to hire a manager for the building is estimated to be $100,000 per year. After five years of operation, the apartment building can be sold for $18,000,000. What is the annual rent per apartment unit that will provide a return on investment of 17%? Assume that the building will remain fully occupied during its five years of operation. The annual rent per apartment unit should be $ ______thousand. (Round to one decimal place.).arrow_forwardExplanation for option e is not mentionedarrow_forward
- "A financial investor has $31,000 to invest. The choices have been narrowed down to the following two options.-OPTION 1:Invest in a foreign bond that will mature in one year. This will entail an immediate brokerage fee of $100. For simplicity, assume that the bond will provide interest of $2,470, $2,130, or $1,527 over the one-year period and that the probabilities of these occurrences are assessed to be 0.29, 0.43, and 0.28, respectively.-OPTION 2:Invest in a $31,000 certificate with a savings-and-loan association. Assume that this certificate has an effective annual rate of 5.6%.Which form of the investment should the investor choose in order to maximize her expected financial gains? Enter the expected net gain (total return - initial investment - fee) of the preferred option."arrow_forwardA tire manufacturing plant is considering purchasing $14,000 worth of new tools for use on the production line. It is estimated that the new tools will reduce required labor by $3,000 each year. The payback period for the new tools is approximately Group of answer choices 5 years 6 years 5.13 years 4.67 yearsarrow_forwardElectric posts and transmission lines must be installed in a new industrial park. It has been estimated that 23 km of transmission lines will be needed and each kilometer of line costs P14,000.00 including the installation. In addition a pole must be placed every 100 meters on the average to support the lines, and the cost of the pole and its installation is P2,100.00 including labor. What is the cost of the entire project?arrow_forward
- It is well established that indoor air quality (IAQ) has a significant effect on general health and productivity of employees at a workplace. A study showed that enhancing IAQ by increasing the building ventilation from 5 cfm (cubic feet per minute) to 20 cfm increased the productivity by 0.25 percent, valued at $90 per person per year, and decreased the respiratory illnesses by 10 percent for an average annual savings of $39 per person while increasing the annual energy consumption by $6 and the equipment cost by about $4 per person per year (ASHRAE Journal, December 1998). For a workplace with 120 employees, determine the net monetary benefit of installing an enhanced IAQ system to the employer per year.arrow_forwardthe potential percent gain or loss in changes of variable is taken into account by A. Break even analysis b. Cost benefit analysis c. Present worth analysis d. Sensitivity analysisarrow_forwardTwo 150-horsepower (HP) motors are being considered for installation at amunicipal sewage treatment plant. The first costs $4,500 and has an operating efficiency of 83%. The second costs $3,600 and has an operating efficiency of 80%. Both motors are projected to have zero salvage value after a life of 10 years. All the annual charges, such as insurance and maintenance, amount to a total of 15% of the original cost of each motor. If power cost is a flat 5 cents per kilowatt-hour, which alternative should be chosen at 5,000 operating hours per year? Assume an interest rate of 6%. (A conversion factor you might find useful is IHP = 746watts = .746kilowatts.)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
DATA GEMS: How to Access Income Data Tables and Reports From the CPS ASEC; Author: U.S. Census Bureau;https://www.youtube.com/watch?v=BWpVC-Clczw;License: Standard Youtube License