A city is considering the development of a recreational complex. Two plans are under consideration: Under plan 1, building will have to be refurbished at a cost of $60,000 every 15 years and facilities have to be refurbished at a cost of $100,000 every 10 years. Under plan 2, building will have to be refurbished every 25 years and facilities every 10 years at a cost equal to origional cost of construction. Considering "infinite life", which alternative should be selected based on a) Present worth analysis (interest = 10%) b) Annual cash flow analysis (interest = 10%) Plan 1 $125,000 $125,000 Plan 2 Land development (life permanent) Buildings (life permanent) $125,000 $175,000 Recreational Facilities (life $100,000$100,000 permanent) Annual maintenance DO NOT COPY FROM CHEGG I NEED A FULL EXPLANATION $12,000 $4,000

A city is considering the development of a recreational complex. Two plans are under consideration: Under plan 1, building will have to be refurbished at a cost of $60,000 every 15 years and facilities have to be refurbished at a cost of $100,000 every 10 years. Under plan 2, building will have to be refurbished every 25 years and facilities every 10 years at a cost equal to origional cost of construction. Considering "infinite life", which alternative should be selected based on a) Present worth analysis (interest = 10%) b) Annual cash flow analysis (interest = 10%) Plan 1 $125,000 $125,000 Plan 2 Land development (life permanent) Buildings (life permanent) $125,000 $175,000 Recreational Facilities (life $100,000$100,000 permanent) Annual maintenance DO NOT COPY FROM CHEGG I NEED A FULL EXPLANATION $12,000 $4,000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Two mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given below. The MARR is 12% per year. The decision-maker can select one of these alternatives or decide to select none of them. Make a recommendation based on the following methods. Design Y a. Based on PW method, Design is more economical. b. The modified B/C ratio of Design Y is The modified B/C ration of Design Z is c. The incremental B/C ratio is (Round to two decimal places) Therefore, based on the B/C ratio method, Design Investment cost Annual revenue Annual cost Useful life Salvage value (Round to two decimal places) (Round to two decimal places) d. The discounted payback period of Design Y is The discounted payback period of Design Z is Net PW is is more economical years (Round to one decimal place) years (Round to one decimal place) $140,000 $51,725 $9,672 15 years $14,700 $149,103 Design Z $275,000 $84,946 $18,059 15 years $33,000 $186,587 Therefore, based on…
Two different liquid filter systems are being studied to clarify a liquid stream. A traditional filter will operate for one 8-hour shift before being replaced. A special pleated design can last one full week, operating 24 hours a day (3 shifts), 5 days per week. Labor cost to change a filter is estimated to be worth $10.00 for each filter change because a mechanic would work overtime to change the filter. The traditional filters cost $3.50; the special pleated filters cost $90.00. Which filter should be chosen?
Polymer Molding, Inc. is considering two processes for manufacturing storm drains. Plan A involves conventional injection molding that will require making a steel mold at a cost of $2 million. The cost for inspecting, maintaining, and cleaning the molds is expected to be $60,000 per year. Since the cost of materials for this plan is expected to be the same as for the other plan, this cost is not included in the comparison. The salvage value for plan A is expected to be 10% of the first cost. Plan B involves using an innovative process known as virtual engineered composites wherein a floating mold uses an operating system that constantly adjusts the water pressure around the mold and the chemicals entering the process. The first cost to tool the floating mold is only $795,000, but because of the newness of the process, personnel and product-reject costs are expected to be higher than for a conventional process. The company expects the operating costs to be $85,000 for the first year and…
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 108000 vehicles per day must use the intersection to justify the second system. (Round up to the nearest whole…
Waller County is planning to construct a Dam some tens of miles away from the Hempstead Recreation center to facilitate fishing in the El Manny River Basin and Power Generation. The first cost for the Dam will amount to $6,500,000. Annual maintenance and repairs will amount to $24,000 for the first four years, to $28,000 for each year in the next eight years, and to $32,000 per year for the next four years. At the end of the 16th year, $25,000 is estimated to be deposited into Waller county account as tax credits earned for its environmental compliance in the construction and operation of the Dam. In addition a major overhaul costing $650,000 will be required at the end of the seventh year. Use an interest rate of 10% and : a) Determine the engineering economy symbols and their value for each option. b) Construct the cash flow diagram c) Calculate the Capital Recovery for the project
Six projects have been identified for possible implementation by a company that makes dry ice blasters, machines that propel tiny dry ice pellets at supersonic speeds so they flash freeze and then lift grime, paint, rust, mold, asphalt, and other contaminants off in-place machines and a wide range of surfaces. The present worth of each project has been determined. Identify all acceptable mutually exclusive bundles if the budget limitation is $32,000. Arrange the acceptable bundles in such a way that the total PW values are in ascending order. Project Project PW at 15%, $ L 29,000 M 11,000 N 41,000 O 35,000 P 6,000 Q 2,000
An electric utility is taking bids for the purchase, installation, and operation of decentralized battery storage systems. The table below has some details for the two bids received. a) Which is the most economical bid if the rate is 11%. None of the batteries are expected to have a salvage value after 30 years of use. (Actual expected service life is listed in the bid) b) Also solve using NPW method to compare these two mutually exclusive plans Equipment cost Installation cost Annual Inspection and Maintenance fee Annual extra income taxes Life Salvage Value Bid A $112,000 $25,000 $2,000 0 40 years 0 Bid B $98,000 $30,000 $2,000 $800 35 years 0
Five mutually exclusive alternatives are being considered for providing a sewage- treatment facility. The annual equivalent costs and estimated benefits of the alternatives are as follows: Alternative E Annual Equivalent (in thousands) Cost $1,050 Benefits $1,110 900 $1,810 1,230 $1,390 1,350 $1,500 990 $1,140 Which plan, if any, should be adopted if the Sewage Authority wishes to invest if, and only if, the B-C ratio is at least 1.0.?
A relocation of a short stretch of rural highway feeding into Route 390 northwest of Dallas is to be made to accommodate new growth. The existing road is now unsafe, and improving it is not an alternative. Alternate new route locations are designated as East and West. The initial investment by government highway agencies will be $4,000,000 for East and $5,125,000 for West. Annual highway maintenance costs will be $120,000 for East and $90,000 for the shorter location West. Relevant annual road user costs, considering vehicle operation, time en route, fuel, safety, mileage, and so on, are estimated as $880,000 for East and only $730,000 for West. Assume a 20-year service life and i-7% Part a What is the present worth of the benefits and costs of route West over route East? PW benefits of route West over route East: $ PW costs of route West over route East: $