EBK CONTEMPORARY ENGINEERING ECONOMICS
6th Edition
ISBN: 8220101336736
Author: Park
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 42P
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
Engineering Economics
Bawal gumamit ng excel( Don't use Excel)
A small company has P20,000 in surplus capital that it wishes to invest in new revenue producing projects. Three independent sets of mutually exclusive projects have been developed. The useful life of each is five years and all market values are zero. You have been asked to perform an IRR analysis to select the best combination of projects. If the MARR is 12% per year, which combination of projects would you recommend?
What is FW of Design A, Design B, and Design C. Which alternative should be chosen. Do not round off in the solution.
Investment projects may be appraised by calculating either Net Present Value (NPV) or Internal Rate of Return (IRR). Explain which method is generally superior.
Chapter 7 Solutions
EBK CONTEMPORARY ENGINEERING ECONOMICS
Ch. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10P
Ch. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - Consider an investment project with the cash flows...Ch. 7 - Consider the investment projects given in Table...Ch. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Consider the investment projects given in Table...Ch. 7 - Consider the investment projects given in Table...Ch. 7 - Prob. 21PCh. 7 - Prob. 22PCh. 7 - Consider the investment projects given in Table...Ch. 7 - Prob. 24PCh. 7 - Prob. 25PCh. 7 - Prob. 26PCh. 7 - Prob. 27PCh. 7 - Prob. 28PCh. 7 - Prob. 29PCh. 7 - Prob. 30PCh. 7 - Prob. 31PCh. 7 - Prob. 32PCh. 7 - Prob. 33PCh. 7 - Prob. 34PCh. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Prob. 39PCh. 7 - Prob. 40PCh. 7 - Prob. 41PCh. 7 - Prob. 42PCh. 7 - Consider the two mutually exclusive investment...Ch. 7 - You are considering two types of automobiles....Ch. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - Fulton National Hospital is reviewing ways of...Ch. 7 - Prob. 48PCh. 7 - Consider the investment projects given in Table...Ch. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Prob. 53PCh. 7 - Prob. 54PCh. 7 - Prob. 55PCh. 7 - Prob. 56PCh. 7 - Prob. 57PCh. 7 - Prob. 1STCh. 7 - Prob. 2STCh. 7 - Prob. 3STCh. 7 - Prob. 4STCh. 7 - Prob. 5ST
Knowledge Booster
Similar questions
- (engineering economics) . A dam was built with a construction cost of Rp. 20,000,000,000 in the first year, while in the second year the construction and equipment costs of Rp. 40,000,000,000. During operation the dam will require an operational cost of Rp. 300,000,000 every year. In addition, a maintenance fee of Rp. 450,000,000 every year. While the benefits that will be obtained from the various uses of the dam each year are estimated as follows: Electricity generation : Rp. 1,500,000,000 Flood control: Rp. 500,000,000 Watering : Rp. 1,000,000,000 Recreational facilities : Rp. 800,000,000 Calculate the Benefit/Cost Ratio with i = 12% per year from this project if it is estimated that the dam will be used for 20 years and after that there is a salvage value of Rp. 10,000,000,000arrow_forwardA project capitalized for P5,000,000 is expected to earn a uniform annual revenue of P1,000,000 in 10 years. The cost of operation and maintenance is P100,000 a year, taxes and insurance will cost 3% of the first cost per year. If the company expects its capital to earn 12% income before taxes, would you recommend investing in the project? Use the PW method. Determine the present worth of income.Determine the present worth of cost.Will it be worthwhile to invest for the apartment?arrow_forwardProjects A and B have first costs of $6,500 and $17,000, respectively. Project A has net annualbenefits of $2,000 during each year of its 5-year useful life, after which it can be replacedidentically.Project B has net annual benefits of $3,000 during each year of its 10-year life. Use present worthanalysis, and an interest rate of 10% to determine which project to select.arrow_forward
- The Philippine Institute of Industrial Engineers (PIIE) is planning to put up its own building. Two proposals being considered are: A: The construction of the building now to cost Php 400,000 B: The construction of a smaller building now to cost Php 300,000 and at the end of 5 years to be added to cost Php 120,000 By how much is proposal A more economical than proposal B if interest is to be neglected?arrow_forwardProject A requires an immediate investment of $8000 and another $6000 in three years. Net returns are $4000 after two years, $12,000 after four years, and $8000 after six years. Project B requires an immediate investment of $4000, another $6000 after two years, and $4000 after four years. Net returns are $3400 per year for seven years. Determine the net present value at 10%. Which project is preferable according to the net present value criterion?arrow_forwardEngineering economics problem. please show the answer in steps 3. A metal plating company is considering four different methods for recovering byproduct heavy metals from a manufacturing site’s liquid waste. The investment costs and incomes associated with each method have been estimated as shown below. All methods have an 8-year life. The MARR is 11% per year. use Excel to solve any iterative formula, but explain your solution method on paper (please attached the excel sheet solution). (a) If the methods are independent, because they can be implemented at different plants, which ones are acceptable? (b) If the methods are mutually exclusive, determine which one method should be selected, using a ROR evaluation.arrow_forward
- What is the IRR for a Nonsimple Project: Mixed Investment?arrow_forwardIf the capital budget limit is $120,000, the MARR is 10% per year, and all projects have a 10-year life, rank and select from the independent projects using the (a) PI measure, (b) IROR measure, and (c) PW at the MARR. (d) Are different projects selected using the three methods? First Net Income, IROR, PW at Project Cost, $ $ per Year % 10%, $ A −18,000 4,000 18.0 6,578 B −15,000 2,800 13.3 2,205 C −35,000 12,600 34.1 42,422 D −60,000 13,000 17.3 19,879 E −50,000 8,000 9.6 −843arrow_forwardeither of the following two equations can be applied to determine the amount necessary to recover invested capital and a required return: CR1 = −P(A∕P,i,n) + S(A∕F,i,n) or CR2 = −[(P – S)(A/P,i,n) + S(i)] For an alternative that has a first cost of $50,000 and a salvage value of $5,000 after its 5-year life, show that the capital recovery calculated using either of these equations is exactly the same. Use an interest rate of 10% per year.arrow_forward
- Given four proposals for funding a new project with a 100M limit on capital funding and the MARR is established at 12% per year. Project First Cost Estimated Annual Savings Project Life, Years W 12M 5M 3 X 25M 7.3M 4 Y 45M 12.1M 6 Z 60M 9M 8 Use the exact internal rate of return method to determine which of the four independent projects should be funded. Write the value of the acceptable project accordingly/in sequence (W/X/Y/Z). ANSWER for ALTERNATIVE 1: Blank 1 ANSWER for ALTERNATIVE 2: Blank 2arrow_forwardThree independent project R, S, & T. If the PW of these projects at MARR is as follows: PWS= $80,000, PWR = -$50,000, PWT = $70,000. Write down the bundles that you can be immediately excluded from the analysis.arrow_forwardA water supply cooperative plans to increase its water supply by 8.5 million gallons per day to meet increasing demand. One alternative is to spend $10 million to increase the size of an existing reservoir in an environmentally acceptable way. Added annual upkeep will be $25,000 for this option. A second option is to drill new wells and provide added pipelines for transportation to treatment facilities at an initial cost of $1.5 million and annual cost of $120,000. The reservoir is expected to last indefinitely, but the productive well life is only 10 years. Compare the alternatives at 5% per year.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