Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 52P
(a):
To determine
Calculate the present worth.
(b):
To determine
Calculate the new present worth.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The Ford Motor Company is considering three mutually exclusive
electronic stability control systems for protection against rollover of its
automobiles. The investment period is four years (equal lives), and the
MARR is 10% per year. Data for fixturing costs of the systems are given
below. Which alternative should the company select?
Capital
Alternative IRR Investment
A
BC
с
19.7%
19.9%
19.3%
The AW of the alternative A is $
$12,000
$15,700
$8,000
Annual
Receipts
Less
Expenses
$4,000
$5,400
$2,750
Salvage
Value
$3,250
$3,500
$1,600
(Round to the nearest dollar.)
Can you compute the PW of alternative A, the AW of alternative B, the FW of Alternative C, and the PW of alternative D? Also for a MARR of 12%, rank the MEAs from most profitable to least profitable. HINT: You will need to perform additional calculations before answering this question.
A new manufacturing facility will produce two products, each of which requires a drilling operation during processing. Two alternative types of drilling machines (D1 and D2) are being considered for purchase. One of these machines must be selected. For the same
annual demand, the annual production requirements (machine hours) and the annual operating expenses (per machine) are listed in the table below. Which machine should be selected if the MARR is 12% per year? Assumptions: The facility will operate 1,750 hours per year.
Machine availability 75% for Machine D1 and 70% for Machine D2. The yield of D1 is 90%, and the yield of D2 is 80%. Annual operating expenses are based on an assumed operation of 1,750 hours per year, and workers are paid during any idle time of Machine D1 or
Machine D2. Assume repeatability.
Click the icon to view the alternatives description.
Click the icon to view the interest and annuity table for discrete compounding when i = 12% per year.
The total equivalent…
Chapter 5 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - If a project costs 100,000 and is expected to...Ch. 5 - Refer to Problem 5.2, and answer the following...Ch. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Consider the cash flows from an investment...Ch. 5 - Prob. 10P
Ch. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Consider the project balances in Table P5.19 for a...Ch. 5 - Your RD group has developed and tested a computer...Ch. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Geo-Star Manufacturing Company is considering a...Ch. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 37PCh. 5 - Prob. 38PCh. 5 - Prob. 39PCh. 5 - Prob. 40PCh. 5 - Prob. 41PCh. 5 - Prob. 42PCh. 5 - Two methods of carrying away surface runoff water...Ch. 5 - Prob. 44PCh. 5 - Prob. 45PCh. 5 - Prob. 46PCh. 5 - Prob. 47PCh. 5 - Prob. 48PCh. 5 - Prob. 49PCh. 5 - Prob. 50PCh. 5 - Prob. 51PCh. 5 - Prob. 52PCh. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - Prob. 55PCh. 5 - Prob. 56PCh. 5 - Prob. 57PCh. 5 - Prob. 58PCh. 5 - Prob. 59PCh. 5 - Prob. 1STCh. 5 - Prob. 2ST
Knowledge Booster
Similar questions
- A new manufacturing facility will produce two products, each of which requires a drilling operation during processing. Two alternative types of drilling machines (D1 and D2) are being considered for purchase. One of these machines must be selected. For the same annual demand, the annual production requirements (machine hours) and the annual operating expenses (per machine) are listed in the table below. Which machine should be selected if the MARR is 12% per year? Assumptions: The facility will operate 2,000 hours per year. Machine availability is 85% for Machine D1 and 80% for Machine D2. The yield of D1 is 95%, and the yield of D2 is 85%. Annual operating expenses are based on an assumed operation of 2,000 hours per year, and workers are paid during any idle time of Machine D1 or Machine D2. Assume repeatability. Click the icon to view the alternatives description. Click the icon to view the interest and annuity table for discrete compounding when i = 12% per year. The total…arrow_forwardA manufacturing engineer is considering whether to repair or replace a broken machine. The first alternative (Alternative “A”) is to repair the machine with an initial cost of $15,000, an annual maintenance of $700 per year, with no salvage value at the end of its five-year useful life. The second alternative (Alternative “B”) is to replace the machine for $30,000. The maintenance cost starts in the second year at $200 and increases $200 per year in all subsequent years. There is an anticipated salvage value of $5,000 at the end of 20 years. Assuming interest rate is 6% and an analysis period of 20 years, what would be the preferable alternative ?arrow_forwardYour company plans to develop a bridge of an estimated cost of 6 million dollars ($6,000,000) of estimated development time of one year. After the year, the bridge will be opened for lightweight vehicles and small trucks. The lightweight vehicles and trucks have to pay $5 and $10 toll respectively for each usage of the bridge. If 15,000 lightweight vehicles and 2,500 trucks pass the bridge in every month, in which year will the company reach break-even? Suppose your company decided to allow heavy-duty vehicles. The heavy-duty vehicles have to pay $50 in each pass and 1000 heavy-duty vehicles pass in every month. But, there is a structural fault detected that cost an additional $1,500,000 after two years of construction. In this new scenario, in which year will the company reach break-even?arrow_forward
- A municipality is trying to decide on the purchase of a refuse collection vehicle. Two types are being considered, A and B, and the capital and operating costs are as shown. Each truck is expected to have a useful life of 10 yrs. t Truck A Truck B Initial(capital)cost $110,000 $85,000 Maintenance cost/yr. 3,000 6,000 Fuel and oil cost/yr 4,000 7,000 Which truck should the municipality purchase based on these costs alone? Calculate the cost both on an annual and present worth basis, assuming an interest rate of 8%. What is the Capital Recovery for Truck A? What is the Capital Recovery for Truck B? What is the Total Annual Cost for Truck B? What is the Total Annual Cost for Truck A?arrow_forwardConsider the following mutually exclusive alternatives: Alternative A Alternative B Capital investment $473,000 $1,114,000 Net annual receipts $104,100 $235,000 Both alternatives have a useful life of 20 years and no market value at that time. The MARR is 20 % per year. Determine the annual worth (AW) of the most profitable course of action. (Enter your answer as a number without the dollar sign.)arrow_forwardA company produces organic products (Fertilizes) and needs to construct a building to store its products. Two options were available to the company: the first option is executing A reinforced concrete structure with a cost of $160,000, and the second choice is building A steel-framed structure with a cost of $60,000. The estimated useful life of the concrete building is 60 years with no need for repair cost for the first ten years of the building's age, while the repair cost for the other years is $1,000 a year. The estimated age of the steel building is 20 years with a repair cost of $1,150 a year. The salvage value of the concrete building and steel building is $40,000 and $6,000, respectively. If the interest rate is 10%, which option is more economic for the company? (Hint: to perform a comparison you need to find the annual equivalent of the uniform payment series).arrow_forward
- For the four alternatives described in the table, which project or projects should be selected, using ROR method and MARR of 13% ? (Use only capital letters for alternatives names exactly as in table. For Ai*, use number followed by % immediately (no space)) 1- if they are independents: 2- If they are mutually exclusive: fill in the steps below based on the comparison with MARR = 13% Step 1: Exclude alternative Overall Incremental Rate of Return, % ROR, % A from competition First Alternative Cost, $ B D -80.000 14 -60.000 16 12 Step 2: |(challenger) VS|| -40.000 17 11 14 17 23 D -30,000 12 35 (defender), Ai* = -----> select Step 3: ( challenger) VS (defender), Ai* = selectarrow_forwardThree mutually exclusive alternatives are being considered for the production equipment at a tissue paper factory. The estimated cash flows for each alternative are given here. (All cash flows are in thousands.)Which equipment alternative, if any, should be selected? The firm’s MARR is 20% per year. Please state your assumptions.arrow_forwardTwo traffic signal systems are being considered for an intersection. One system costs $31,000 for installation and has an efficiency rating of 80%, requires 26 kW power (output), incurs a user cost of $0.23 per vehicle, and has a life of 9 years. A second system costs $47,000 to install, has an efficiency rating of 87%, requires 34 kW power (output), has a user cost of $0.19 per vehicle, and has a life of 17 years. Annual maintenance costs are $75 and $95, respectively. MARR = 8% per year. How many vehicles must use the intersection to justify the second system when electricity costs $0.09/kWh? Assume salvage value for each system equals zero. Project the difference in the user cost as savings for the second system. There are approximately 8,760 hours/year. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 8% per year. At least vehicles per day must use the intersection to justify the second system. (Round up to the nearest whole number.)arrow_forward
- The annual benefits of $4,000 every year for three years may be obtained for an investment on a production equipment costing $20,000 with a salvage value of $5,000. If the interest rate is 6%, choose the right equation to determine the NPW. Group of answer choices NPW = -20,000 + 4,000(P/A, 6%, 3) + 5,000(P/F, 6%, 3) NPW = -20,000(P/F, 6%, 3) + 4,000(P/A, 6%, 3) + 5,000(P/F, 6%, 3) NPW = 20,000(F/P, 6%, 3) + 4,000(F/A, 6%, 3) + 5,000 NPW = 20,000(P/F, 6%, 3) + 4,000(F/A, 6%, 3) + 5,000arrow_forwardTwo mutually exclusive design alternatives are being considered for purchase. Doing nothing is also an option. The estimated cash flows for each alternativeare given below. The MARR is 8% per year. Using the PW method, which alternative, if either, should be recommended? State your assumptions and your reasoning in arriving at a recommendation.arrow_forwardA one-mile section of a roadway in Florida has been washed out by heavy rainfall. The county is considering two options for rebuilding the road. Pertinent data are presented below. If the county's MARR for this type of project is 9% per year, which replacement option should be chosen? Assume repeatability. 1) The equivalent uniform annual cost for the asphalt option is $ ? 2) The equivalent uniform annual cost for the concrete option is $ ? 3) Select the ? option.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