5. A steam boiler is purchased on the basis of guaranteed performance. A test indicates that the operating cost will be $300 more per year than the manufacturer guaranteed. If the expected life of the boiler is 20 years, and money is worth 8%, what amount should the purchaser deduct from the purchase price to compensate for the extra operating cost?

5. A steam boiler is purchased on the basis of guaranteed performance. A test indicates that the operating cost will be $300 more per year than the manufacturer guaranteed. If the expected life of the boiler is 20 years, and money is worth 8%, what amount should the purchaser deduct from the purchase price to compensate for the extra operating cost?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1.5

5. A steam boiler is purchased on the basis of guaranteed performance. A test indicates
that the operating cost will be $300 more per year than the manufacturer guaranteed.
If the expected life of the boiler is 20 years, and money is worth 8%, what amount
should the purchaser deduct from the purchase price to compensate for the extra
operating cost?
6. A project has an investment cost of $10,000, uniform annual benefits of $2,400, and a
salvage value of $3,000 at the end of its 10-year useful life. At 12% interest, what is
the net present worth (NPW) of the project?

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