In marble block quarrying operation, hand rock drills, costing P70,000 each, is used. It has a drilling rate of 15 cm/min, produces 30 cubic meters of block per month and consumes 80 liters of diesel fuel for compressor drive, per rock drill per cubic meter produced utilizing 1 worker per drill. A modern equipment quarry bar mounted rock drill is being offered for P180,000 per unit and has a drilling rate of 65 cm/min that will produce 75 cubic meters of block per month, but consumes 135 liters of diesel fuel for the compressor drive per cubic meters of block produced, utilizing 2 workers per quarry bar drill. Consider diesel fuel at P6.55 per liter at quarries, worker earning P375 per day, 22 days per month, 12 years life of both drills with 13% salvage

In marble block quarrying operation, hand rock drills, costing P70,000 each, is used. It has a drilling rate of 15 cm/min, produces 30 cubic meters of block per month and consumes 80 liters of diesel fuel for compressor drive, per rock drill per cubic meter produced utilizing 1 worker per drill. A modern equipment quarry bar mounted rock drill is being offered for P180,000 per unit and has a drilling rate of 65 cm/min that will produce 75 cubic meters of block per month, but consumes 135 liters of diesel fuel for the compressor drive per cubic meters of block produced, utilizing 2 workers per quarry bar drill. Consider diesel fuel at P6.55 per liter at quarries, worker earning P375 per day, 22 days per month, 12 years life of both drills with 13% salvage

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

In marble block quarrying operation, hand rock drills,
costing P70,000 each, is used. It has a drilling rate of
15 cm/min, produces 30 cubic meters of block per
month and consumes 80 liters of diesel fuel for
compressor drive, per rock drill per cubic meter
produced utilizing 1 worker per drill. A modern
equipment quarry bar mounted rock drill is being
offered for P180,000 per unit and has a drilling rate
of 65 cm/min that will produce 75 cubic meters of
block per month, but consumes 135 liters of diesel
fuel for the compressor drive per cubic meters of
block produced, utilizing 2 workers per quarry bar
drill. Consider diesel fuel at P6.55 per liter at
quarries, worker earning P375 per day, 22 days per
month, 12 years life of both drills with 13% salvage
value, 3% annual tax rate, P300 per cubic meter
monthly for other expenses and sold at P1,500 per
cubic meter. Would you recommend the purchase of
the new equipment? What is the pay-out period of
the better drill?
PP for HAND DRILL :
years (2
decimal places)
PP for MOUNTED DRILL :
years (2
decimal places)
Hand drill or mounted drill:

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