EBK BASICS OF ENGINEERING ECONOMY
2nd Edition
ISBN: 8220100255052
Author: Blank
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 38P
To determine
Selection of independent alternative on the basis of overall
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Four mutually exclusive alternatives are being evaluated, and their costs and revenues are itemized in the Table. If the MARR 15%per year and the analysis period is 12 years, use the PW method to determine PW1, PW2, PW3, PW4, and which one of those four is the best alternative ?
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 $
Fiesta Foundry is considering a new furnace that will allow them to be more productive. Three alternative furnaces are under consideration. Perform an incremental analysis of these alternatives using the IRR method for each increment of cash flows. The MARR is 14% per year.
Chapter 6 Solutions
EBK BASICS OF ENGINEERING ECONOMY
Ch. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Prob. 7PCh. 6 - Prob. 8PCh. 6 - A University of Massachusetts study found that...Ch. 6 - Prob. 10P
Ch. 6 - The Closing the Gaps initiative by the Texas...Ch. 6 - Prob. 12PCh. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - Prob. 17PCh. 6 - Prob. 18PCh. 6 - Prob. 19PCh. 6 - Prob. 20PCh. 6 - Prob. 21PCh. 6 - Prob. 22PCh. 6 - Prob. 23PCh. 6 - Prob. 24PCh. 6 - Prob. 25PCh. 6 - A company that manufactures rigid shaft couplings...Ch. 6 - For each of the following scenarios, state whether...Ch. 6 - Prob. 28PCh. 6 - Prob. 29PCh. 6 - Prob. 30PCh. 6 - Prob. 31PCh. 6 - Prob. 32PCh. 6 - Prob. 33PCh. 6 - Prob. 34PCh. 6 - Prob. 35PCh. 6 - The four alternatives described below are being...Ch. 6 - Prob. 37PCh. 6 - Prob. 38PCh. 6 - Ashley Foods, Inc. has determined that only one of...Ch. 6 - Five revenue projects are under consideration by...Ch. 6 - Four different machines are under consideration...Ch. 6 - Prob. 42PCh. 6 - Prob. 43PCh. 6 - Prob. 44PCh. 6 - Prob. 45PCh. 6 - Prob. 46PCh. 6 - Prob. 47PCh. 6 - Prob. 48PCh. 6 - Prob. 49PCh. 6 - Prob. 50PCh. 6 - Prob. 51PCh. 6 - Prob. 52PCh. 6 - Prob. 53PCh. 6 - Prob. 54PCh. 6 - Prob. 55PCh. 6 - Prob. 56PCh. 6 - Prob. 57PCh. 6 - Prob. 58PCh. 6 - Prob. 59PCh. 6 - Prob. 60APQCh. 6 - Prob. 61APQCh. 6 - Prob. 62APQCh. 6 - Prob. 63APQCh. 6 - Prob. 64APQCh. 6 - Prob. 65APQCh. 6 - Prob. 66APQCh. 6 - Prob. 67APQCh. 6 - Prob. 68APQCh. 6 - Prob. 69APQCh. 6 - Prob. 70APQ
Knowledge Booster
Similar questions
- 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_forwardIn 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.arrow_forwardIn 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_forward
- Two proposals remain for consideration that have been put forward for a hydroelectric system. Moreover, the water system of alternative 1 will cost $30 (unit $0,000) and need to be replace every 10 year indefinitely (starting end of year 10), and the water system of alternative 2 will cost $40 (unit $0,000) and will need to be replace every 15 year indefinitely (starting end of year 15). Estimate annual cost for each system which alternatives should be invested if the corporate MARR is currently 10% per year.arrow_forwardA piece of new equipment has been proposed by engineers to increase the productivity of a certain manual welding operation. The investment cost is 2,500,000, and the equipment will have a market value of 50,000 at the end of a study period of 15 years. Increased productivity attributable to the equipment will amount to 500,000 per year after extra operating costs have been subtracted from the revenue generated by the additional production. If the firm’s Minimum Attractive Rate of Return is 22% per year, is this proposal a sound one? Use the Present Worth Method and Annual Worth Method.arrow_forwardRent-A-Wreck car rental agency has a contract with PM Warranty, Inc. to do major repairs for $700 per car. The car rental agency estimates that it could repair its own cars for $300 each if it acquires a facility for $300,000 now. A salvage value of $40,000 after 15 years is estimated for the facility. What is the minimum number of cars that must be repaired each year to make the acquisition attractive at an interest rate of 10% per year?arrow_forward
- Please do not give solution in image formate thanku. Biomet Implants is planning new online patient diagnostics for surgeons while they operate. The new system will cost $300,000 to install in an operating room, $5000 annually for maintenance, and have an expected life of 10 years. The revenue per system is estimated to be $80,000 in year 1 and to increase by $10,000 per year through year 10. a) Determine NPV to see if the project is economically justified using PW analysis and an MARR of 10% per year. b) Insert a Triangle distribution with minimum at $8000, average 10,000 and maximum at 12000 as the input distribution for the revenue increase. Perform Monte Carlo Simulation and discuss the results.arrow_forwardConsider a hybrid vehicle with a sticker price of $31,500. These vehicles will average 30 miles per gallon of gasoline. $1,500 tax credit for hybrid vehicles Effectively reduce the sticker price to $30,000. A gasoline-only vehicle that Comparablely equipped will cost $28,000 and will average 25 miles per gallon of gasoline. Assuming an interest rate of 3% per year and a five-year study period, find the cost gasoline breakeven ($/gal)arrow_forwardCompare three alternatives on the basis of their capitalized costs at i=9.00% per year and select the best alternative. (Include a minus sign if necessary.) The capitalized cost of alternative E is $ ox, alternative F is $1375347.55, and alternative G is $ The best alternative isarrow_forward
- 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.…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_forwardA government-funded wind-based electric power generation company in the southern part of the country has developed the following estimates (in $1000) for a new turbine farm. The MARR is 10% per year and the project life is 25 years. Benefits: $45,000 in year 0; $29,500 in year 5 Government savings: $2,000 in years 1 through 20 Cost: $58,000 in year 0 Disbenefits: $3000 in years 1 through 10 NOTE: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. Calculate the PI value. The PI value isarrow_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