An engineer must decide between two ways to pump concrete to the top of a seven-story building. Plan 1 requires the leasing of equipment for $60,000 initially and will cost between $0.40 and $0.95 per metric ton to operate, with a most likely cost of $0.50 per metric ton. The pumper can pump 100 metric tons per 8-hour day. If leased, the asset will have a contract period of 5 years. Plan 2 is a rental option that will cost $12,000 per year. In addition, an extra $17.5 per hour labor cost will be incurred for operating the rented equipment per 8-hour day. Which plan should the engineer recommend if the equipment will be needed for 55 days per year? The MARR is 11% per year. The annual worth of plan 1 lease optimistic is $ . The annual worth of plan 1 most likely is $_____ . The annual worth of plan 1 pessimistic is $___________ . The annual worth of plan 2 rental is $_________ .
An engineer must decide between two ways to pump concrete to the top of a seven-story building. Plan 1 requires the leasing of equipment for $60,000 initially and will cost between $0.40 and $0.95 per metric ton to operate, with a most likely cost of $0.50 per metric ton. The pumper can pump 100 metric tons per 8-hour day. If leased, the asset will have a contract period of 5 years. Plan 2 is a rental option that will cost $12,000 per year. In addition, an extra $17.5 per hour labor cost will be incurred for operating the rented equipment per 8-hour day. Which plan should the engineer recommend if the equipment will be needed for 55 days per year? The MARR is 11% per year. The annual worth of plan 1 lease optimistic is $ . The annual worth of plan 1 most likely is $_____ . The annual worth of plan 1 pessimistic is $___________ . The annual worth of plan 2 rental is $_________ .
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
86%
An engineer must decide between two ways to pump concrete to the top of a seven-story building. Plan 1 requires the leasing of equipment for $60,000 initially and will cost between $0.40 and $0.95 per metric ton to operate, with a most likely cost of $0.50 per metric ton. The pumper can pump 100 metric tons per 8-hour day. If leased, the asset will have a contract period of 5 years. Plan 2 is a rental option that will cost $12,000 per year. In addition, an extra $17.5 per hour labor cost will be incurred for operating the rented equipment per 8-hour day. Which plan should the engineer recommend if the equipment will be needed for 55 days per year? The MARR is 11% per year.
The annual worth of plan 1 lease optimistic is $ .
The annual worth of plan 1 most likely is $_____ .
The annual worth of plan 1 pessimistic is $___________ .
The annual worth of plan 2 rental is $_________ .
Transcribed Image Text:An engineer must decide between two ways to pump concrete to the top of a seven-story building. Plan 1 requires the leasing of
equipment for $60,000 initially and will cost between $0.40 and $0.95 per metric ton to operate, with a most likely cost of $0.50 per
metric ton. The pumper can pump 100 metric tons per 8-hour day. If leased, the asset will have a contract period of 5 years. Plan 2 is a
rental option that will cost $12,000 per year. In addition, an extra $17.5 per hour labor cost will be incurred for operating the rented
equipment per 8-hour day. Which plan should the engineer recommend if the equipment will be needed for 55 days per year? The
MARR is 11% per year.
The annual worth of plan 1 lease optimistic is $
The annual worth of plan 1 most likely is $
The annual worth of plan 1 pessimistic is $
The annual worth of plan 2 rental is $
Plan 1 lease optimistic is better
Plan 1 most likely is better
Plan 1 lease pessimistic is higher
than rental of plan 2.
than rental of plan 2.
than rental of plan 2.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 6 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education