Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 6, Problem 29P
To determine

Calculate the cost per unit.

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A semiconductor chip maker purchased a small manufacturing process plant for $2,131,020. The money coming in from that purchase was determined to be $500,000 annually in before-tax cash flow during its 10-year use. The net cash flow after tax is $300,000. If the chip maker wants to realize a 10% return on its investment after tax, for how many more years should the plant operate? (hint, tables)
12. A ceramics manufacturer sold cups last year for P7.50 each. Variable costs of manufacturing were P2.25 per unit. The company needed to sell 20,000 cups to break even. Net income was P5,040. This year, the company expects the price per cup to be P9.00; variable manufacturing costs to increase 33.3%; and fixed costs to increase 10%. How many cups (rounded) does the company need to sell this year to breakeven? * O 17,111 O 17,500 O 19,250 O 25,667
A company wants to renew its old natural gas fired boiler. According to the receivedprice offer, the new boiler is 400,000 TL in cash. The natural gas consumption of this boiler is 15m3/hour and the price of natural gas is 1.1 TL/m3. The annual real price escalation of natural gas is determined as 1%. The annual cost of the boiler operation and maintenance costs is 25,000 TL and the annual escalationvalue is 17%. By purchasing a new boiler, some of the costs of the old boiler will be saved. The old boiler has costs of 250,000 TL increasing by 15% annually. The new boiler will run for 6,000 hours a year. The annual discount rate is 24% and the annual inflation rate is 17%. Determine whether it is economically feasible to purchase the new boiler by using the annual worthmethod, taking into account the 10-year costs and savings. Use real ratesfor relevant parameters in calculations.
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