HW 1 Problem 2023
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University of Washington *
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Course
411
Subject
Industrial Engineering
Date
Dec 6, 2023
Type
docx
Pages
10
Uploaded by ChefSquid3727
CM332(Homework 1)
Spring 2023
Notes: This homework includes several pages, including this cover page and additional blank
pages for showing your calculations. To be awarded full points on each problem, you must
show both your calculations and your answers to the questions. The point value of each
question is provided in square brackets, based on a total point score of 60.
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1
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Student Name:
Student ID:
CM332(Homework 1)
Spring 2023
Review Questions: [10] In Chapter 1, you learned about equipment selection and utilization. Please
answer the following questions.
(a)
[5] What are the two main factors to evaluate when selecting a piece of equipment for a
project? Can you explain what each means?
Factor 1 = ___________________________________
Why is Factor 1 important for equipment selection?
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
Factor 2 = ___________________________________
Why is Factor 2 important for equipment selection?
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
(b)
[5] Can you summarize the salient aspects of Construction Equipment Utilization in a short
paragraph?
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
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CM332(Homework 1)
Spring 2023
Problem 1: [20] A contractor is considering the purchase of a new $40,000 truck, which has an
estimated useful life of 8 years. He believes that he can sell the used truck for $8,000 at the end of 8
years. Annual operating costs are estimated to be $2,000 per year. As an alternative, the contractor
can purchase a used truck for $20,000 with an estimated useful life of 4 years. Annual operating costs
for the used truck are estimated to be $2,800 per year, and the salvage value should be $2,000 at the
end of the 4 years. Show your calculations in the next page for partial credit on the questions below
.
(c)
[15] At an interest rate of 8%, what will be the annual cost for each of the two alternatives?
Annual cost for new truck =
___________________________________
Annual cost for used truck =
___________________________________
(d)
[5] Which truck should the contractor purchase based on the annual cost? (choose one below)
New truck
Used truck
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(a)
(b)
TOTAL
for P1
Score
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Spring 2023
Page
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Use this extra-space to show your calculations for Problem 1.
CM332(Homework 1)
Spring 2023
Problem 2: [10] A tracked dozer costs $200,000 and it will be operated for ten years. After ten years,
the contractor expects to sell it for $95,000. On average, it will cost $60,000 per year to operate and
maintain the equipment. With
the prevailing rate for interest of 10%, what would be the equivalent
annual cost of owning and operating the equipment?
[10]. With the prevailing rate for interest of 10%, what would be the equivalent annual cost of owning
and operating the equipment?
Annual cost
=
___________________________________
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CM332(Homework 1)
Spring 2023
Page
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(a)
TOTAL
for P2
Score
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CM332(Homework 1)
Spring 2023
Problem 2: [15] A project has a first cost of $120,000 and an estimated salvage value after 25 years of
$0.
Estimated average annual receipts are $25,900; estimated average annual disbursements are
$15,060.
Show your calculations in the next page for partial credit on the question below
.
[15] Assuming that annual receipts and disbursements will be uniform, what is the prospective
rate of return?
Prospective rate of return =
___________________________________
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Use this extra-space to show your calculations for Problem 3.
CM332(Homework 1)
Spring 2023
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(a)
TOTAL
for P3
Score
CM332(Homework 1)
Spring 2023
Problem 4: [15] A contractor has purchased a small excavator for $280,000 that she plans to use for
ten years. She anticipates that the used excavator can be sold for $25,000 after ten years of use.
Average annual earnings generated by the excavator are estimated to be $125,000, and the average
operating and labor cost are estimated to be $75,000.
(a)
[15] What is the estimated rate of return that the excavator will generate for the contractor?
Prospective rate of return =
___________________________________
Page
9
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Use this extra-space to show your calculations for Problem 3.
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Page
10
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(a)
TOTAL
for P4
Score