A city government is considering two types of town-dump sanitary systems. Design A requires an initial outlay of $354,000 with annual operating and maintenance costs of $45,000 for the next 16 years; design B calls for an investment of $277,000 with annual operating and maintenance costs of $67,000 peryear for the next 16 years. Fee collections from the residents would again be $90,000 per year. The interest rate is 11%, and no salvage value is associated with either system.Click the icon to view the interest factors for discrete compounding when /= 11% per year.(a) Using the benefit-cost ratio BC(), which system should be selected?The PIA - B is 2.11. (Round to two decimal places.)Which system should be selected? Choose the correct answer below.ODesign BDesign AI(b) If a new design (design C), which requires an initial outlay of $335,500 and annual operating and maintenance costs of $56,000, is proposed, would your answer in part (a) change?The PIA -c is 4.39. (Round to two decimal places.)The PIC-a is- (Round to two decimal places.)More InfoN11121314151617181920Single PaymentCompoundAmountFactor(F/P, I, N)3.15183.49853.88334.31044.78465.31095.89516.54367.26338.0623PresentWorthFactor(P/F, I, N)0.31730.28580.25750.23200.20900.18830.16960.15280.13770.1240PrintCompoundAmountFactor(F/A, I, N)19.561422.713226.211630.094934.405439.189944.500850.395956.939564.2028DoneEqual Payment SeriesSinking PresentFundWorthFactor Factor(A/F, I, N) (P/A, I, N)6.20650.05110.04406.49240.03826.74990.03320.02916.98197.19090.02550.02250.01980.01760.0156- X7.37927.54887.70167.83937.9633

The benefit-cost ratio (BCR), also known as the cost-benefit ratio (CBR), is a financial metric used…

A city government is considering two types of town-dump sanitary systems. Design A requires an initial outlay of $354,000 with annual operating and maintenance costs of $45,000 for the next 16 years: design B calls for an investment of $277,000 with annual operating and maintenance co year for the next 16 years. Fee collections from the residents would again be $90,000 per year. The interest rate is 11%, and no salvage value is associated with either system. Click the icon to view the interest factors t discrete compounding when i 11% per year.

A city government is considering two types of town-dump sanitary systems. Design A requires an initial outlay of $354,000 with annual operating and maintenance costs of $45,000 for the next 16 years: design B calls for an investment of $277,000 with annual operating and maintenance co year for the next 16 years. Fee collections from the residents would again be $90,000 per year. The interest rate is 11%, and no salvage value is associated with either system. Click the icon to view the interest factors t discrete compounding when i 11% per year.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A city government is considering two types of town-dump sanitary systems. Design A requires an initial outlay of $354,000 with annual operating and maintenance costs of $45,000 for the next 16 years; design B calls for an investment of $277,000 with annual operating and maintenance costs of $67,000 per year for the next 16 years. Fee collections from the residents would again be $90,000 per year. The interest rate is 11%, and no salvage value is associated with either system. Click the icon to view the interest factors for discrete compounding when i= 11% per year. (a) Using the benefit-cost ratio BC(), which system should be selected? The PIA - B is 2.11. (Round to two decimal places.) Which system should be selected? Choose the correct answer below. Design B Design A (b) If a new design (design C), which requires an initial outlay of $335,500 and annual operating and maintenance costs of $56,000, is proposed, would your answer in part (a) change? The Pl()- cis 4.39. (Round to two…
A city government is considering two types of town-clump sanitary systems. Design A requires an initial outlay of $400.000 with annual operating and maintenance costs of $50.000 for the next 15 years: design B calls for an investment of $300.000 with annual operating and maintenance coSIS of $80,000 per year for the next 15 years. Fee collections from the residents would be $85.000 per year. The interest rate is 8%. and no salvage value is associated with either system.(a) By the benefit-cost ratio (BC(i)), which system should be selected?(b) If a new design (design C). which requires an initial outlay of $350,000 and annual operating and maintenance costs of $65,000, is proposed, would your answer to (a) change?
Using exactly the same information from Problem No. 1 above, calculate the Annual Worth of Project Y at 8% per year interest rate. You can see the data in picture one, answer the problem in the second picture.
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The Oklahoma City Zoo has proposed adding to their Web site a major segment providing a virtual tour of the grounds and animals, suitable for both routine enjoyment and educational purposes in classrooms. Survey data indicate that this will have either a neutral or positive effect upon actual zoo attendance. The Web site will be professionally done and have an initial cost of $325,000. Upkeep, refreshing the videos, and developing videos for scientific research and entertainment will cost another $80,000 per year. The zoo is expected to be in operation for an indefinite period; however, a study period of only 10 years for the Web site is to be assumed, with only a residual (salvage) value of 560,000 for the archival value being anticipated. Interest is 7%. An estimated 100,000 persons will visit the e-zoo in the first year, increasing by 30,000 each year, and they will receive, on the average, an additional 50.80 of benefit per visit when the new area is complete. Determine the…
The Oklahoma City Zoo has proposed adding to their Web site a major segment providing a virtual tour of the grounds and animals, suitable for both routine enjoyment and educational purposes in classrooms. Survey data indicate that this will have either a neutral or positive effect upon actual zoo attendance. The Web site will be professionally done and have an initial cost of $325,000. Upkeep, refreshing the videos, and developing videos for scientific research and entertainment will cost another $80,000 per year. The zoo is expected to be in operation for an indefinite period; however, a study period of only 10 years for the Web site is to be assumed, with only a residual (salvage) value of $60,000 for the archival value being anticipated. Interest is 7%. An estimated 100,000 persons will visit the e-zoo in the first year, increasing by 30,000 each year, and they will receive, on the average, an additional $0.80 of benefit per visit when the new area is complete. On the basis of…
For each of the following problems, (a) draw the cash flow diagram; (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box. An existing robot can be kept if $2,000 is spent now to upgrade it for future service requirements. Alternatively, the company can purchase a new robot to replace the old robot. The following estimates have been developed for both the defender and challenger. The company’s MARR is 20% per year. Based on this information? Should the existing robot be replaced now? Assume the robot will be needed for an indefinite period of time. Defender Challenger Current MV $38,000 Purchase Price $51,000 Required Upgrade $2,000 Installation Cost $5,500 Annual Expenses $1,400 Annual Expenses $1,000 Salvage Value - $1,500 Salvage Value $7,000
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A 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).
IBM is considering an environmentally conscious green building at one of its new production facilities. The company will decide among three different green designs for the facility, and each of the final mutually exclusive concepts for the facility results in different costs and savings. These threeconcepts are summarized below. IBM uses 10% per year as its profitability benchmark (hurdle rate) for such comparisons. Which facility concept should be selected?
Two 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.)