ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Chapter 6, Problem 40P
To determine
The better option for treatment of waste between hydro clean projects or costly treatment of waste liquid based on annual cash flow analysis
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The annual maintenance cost of a machine shop is P56,000. If the cost of making a forging is P60.00 per unit and its selling price is twice as the cost of making a forging, find the number of units to be forged to break-even.
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.
A bridge is to be constructed now as part of a new road. Engineers have determined that traffic density on the new road will justify a two-lane road and a bridge at the present time. Because of uncertainty regarding future use of the road, the time at which an extra two lanes will be required is currently being studied.
The two-lane bridge will cost $220,000 and the four-lane bridge, if built initially, will cost $420,000. The future cost of widening a two-lane bridge to four lanes will be an extra $220,000 plus $26,000 for every year that widening is delayed. The MARR used by the highway department is 18% per year. The following estimates have been made of the times at which the four-lane bridge will be required:
Chapter 6 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 6 - Prob. 1QTCCh. 6 - Prob. 2QTCCh. 6 - Prob. 3QTCCh. 6 - Prob. 4QTCCh. 6 - Prob. 5QTCCh. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5P
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