Basics Of Engineering Economy
2nd Edition
ISBN: 9780073376356
Author: Leland Blank, Anthony Tarquin
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 4, Problem 62P
a:
To determine
Calculate the present worth.
b:
To determine
Selection of the project.
c:
To determine
Selection of the new project.
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Students have asked these similar questions
From the PW, AW, and FW values shown, the conventional B/C ratio is closest to:
(а) 1.27
(b) 1. 33
(c) 1.54
PW, $
AW, $/Year
FW, $
First cost
100,000
16,275
259,370
M&O cost
68,798
11,197
178,441
(d) 2. 76
Benefits
245,784
40,000
637,496
(e) Any of the above
Disbenefits
30,723
5,000
79,687
a
b
d
e
A city tnat operates automobile parking facilities is evaluating a proposal to erect and operate a
structure for parking in its downtown area. Three designs for a facility to be built on available
sites have been identified as follows, where all dollar figures are in thousands:
Design A Design B Design C
Cost of site
$240
$180
$200
Cost of building
$2,200
$700
$1,400
Annual fee collection
$830
$750
$600
Annual maintenance cost
$410
$360
$310
Service life
30 years
30 years
30 years
At the end of the estimated service life, the selected facility would be torn down and the land
would be sold. It is estimated that the proceeds from the resale of the land will be equal to the
cost of clearing the site. If the city's interest rate is known to be 10%, which design alternative
would be selected on the basis of the benefit-cost criterion?
Ken Allen, capital budgeting analyst for Bally Gears, Inc., has been asked to evaluate a proposal. The manager of the automotive division believes that replacing therobotics used on the heavy truck gear line will produce total benefits of $516,000 (in today's dollars) over the next 5 years. The existing robotics would produce benefits of $387,000 (also in today's dollars) over that same timeperiod. An initial cash investment of $206,400 would be required to install the new equipment. The manager estimates that the existing robotics can be sold for $72,000. Show how Ken will apply marginal cost-benefit analysistechniques to determine the following:a. The marginal benefits of the proposed new robotics.b. The marginal cost of the proposed new roboticsc. The net benefit of the proposed new robotics.
Chapter 4 Solutions
Basics Of Engineering Economy
Ch. 4 - State two conditions under which the do-nothing...Ch. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7PCh. 4 - Prob. 8PCh. 4 - Prob. 9PCh. 4 - The costs associated with manufacturing a...
Ch. 4 - Prob. 11PCh. 4 - Prob. 12PCh. 4 - Prob. 13PCh. 4 - Prob. 14PCh. 4 - Prob. 15PCh. 4 - Prob. 16PCh. 4 - Prob. 17PCh. 4 - Prob. 18PCh. 4 - Prob. 19PCh. 4 - Prob. 20PCh. 4 - Prob. 21PCh. 4 - Prob. 22PCh. 4 - Prob. 23PCh. 4 - Prob. 24PCh. 4 - Prob. 25PCh. 4 - Prob. 26PCh. 4 - Prob. 27PCh. 4 - Prob. 28PCh. 4 - Prob. 29PCh. 4 - Prob. 30PCh. 4 - Prob. 31PCh. 4 - Two mutually exclusive projects have the estimated...Ch. 4 - Prob. 33PCh. 4 - Prob. 34PCh. 4 - Prob. 35PCh. 4 - Prob. 36PCh. 4 - Prob. 37PCh. 4 - The manager of engineering at the 900-megawatt...Ch. 4 - Prob. 39PCh. 4 - Prob. 40PCh. 4 - Prob. 41PCh. 4 - Three different plans were presented to the GAO by...Ch. 4 - The U.S. Army received two proposals for a turnkey...Ch. 4 - Prob. 44PCh. 4 - Prob. 45PCh. 4 - Prob. 46PCh. 4 - Prob. 47PCh. 4 - Prob. 48PCh. 4 - Prob. 49PCh. 4 - Prob. 50PCh. 4 - Prob. 51PCh. 4 - Prob. 52PCh. 4 - Prob. 53PCh. 4 - Prob. 54PCh. 4 - Prob. 55PCh. 4 - Prob. 56PCh. 4 - Prob. 57PCh. 4 - Prob. 58PCh. 4 - Prob. 59PCh. 4 - Prob. 60PCh. 4 - Prob. 61PCh. 4 - Prob. 62PCh. 4 - Prob. 63APQCh. 4 - Prob. 64APQCh. 4 - Prob. 65APQCh. 4 - Prob. 66APQCh. 4 - Prob. 67APQCh. 4 - Prob. 68APQCh. 4 - Prob. 69APQCh. 4 - Prob. 70APQCh. 4 - Prob. 71APQ
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- Ken Allen, capital budgeting analyst for Bally Gears, Inc., has been asked to evaluate a proposal. The manager of the automotive division believes that replacing the robotics used on the heavy truck gear line will produce total benefits of $560,000 (in today's dollars) over the next 5 years. The existing robotics would produce benefits of $400,000 (also in today's dollars) over that same time period. An initial cash investment of $220,000 would be required to install the new equipment. The manager estimates that the existing robotics can be sold for $70,000. Show how Ken will apply marginal cost-benefit analysis techniques to determine the following: The marginal (added) benefits of the proposed new robotics is $______________ The marginal (added) cost of the proposed new robotics is $__________________ The net benefit of the proposed new robotics isarrow_forwardAll of the following are true when formulating mutually exclusive bundles of independent projects, except: (a) One of the bundles is the do-nothing project. (b) A bundle may consist of only one project. (c) The capital limit may be exceeded as long as it is exceeded by less than 3%. (d) A bundle may include contingent and dependent projects.arrow_forwardDescribe the guidelines for selecting a MARR?arrow_forward
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