Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 6, Problem 31P
To determine

Calculate the cost per mile.

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You invest in a piece of equipment costing $40,000. The equipment will be used for two years, and it will be worth $15,000 at the end of two years. The machine will be used for 4,000 hours during the first year and 6,000 hours during the second year. The expected savings associated with the use of the piece of equipment will be $28,000 during the first year and $40,000 during the second year. Your interest rate is 10%.(a) What is the capital recovery cost?(b) What is the annual equivalent worth?(c) What is net savings generated per machine-hour?
Two 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.)
You 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.).
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