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osion problems -and manufacturing defects rendered a gasoline pipeline between El Paso and Phoenix subject to itudinal weld seam failures. Therefore. the Fure results in delivery of S100,000 per month less product, what will be the value of the lost revenue after a-year d at an interest rate of 11.940397% per year, compounded continuously? pressure was reduced to 80% of the de sign value. If the reduced

osion problems -and manufacturing defects rendered a gasoline pipeline between El Paso and Phoenix subject to itudinal weld seam failures. Therefore. the Fure results in delivery of S100,000 per month less product, what will be the value of the lost revenue after a-year d at an interest rate of 11.940397% per year, compounded continuously? pressure was reduced to 80% of the de sign value. If the reduced

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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**Understanding the Economic Impact of Pipeline Pressure Reduction** Corrosion issues and manufacturing defects caused a gasoline pipeline between El Paso and Phoenix to experience longitudinal weld seam failures. As a result, the pressure was reduced to 80% of the design value, leading to a delivery shortfall valued at $100,000 per month. **Objective**: Calculate the economic impact of this reduction over a 3-year period, given a continuously compounded interest rate of 11.946997% per year. **Concepts Involved**: - *Continuous Compounding*: This method calculates interest assuming it is reinvested constantly, leading to exponential growth. **Problem Setup**: - **Monthly Revenue Loss**: $100,000 - **Interest Rate**: 11.946997% per annum - **Time Frame**: 3 years Your task is to determine the compounded financial loss over this period, which reflects the cumulative economic impact of reduced delivery capacity on revenue.
Transcribed Image Text:**Understanding the Economic Impact of Pipeline Pressure Reduction** Corrosion issues and manufacturing defects caused a gasoline pipeline between El Paso and Phoenix to experience longitudinal weld seam failures. As a result, the pressure was reduced to 80% of the design value, leading to a delivery shortfall valued at $100,000 per month. **Objective**: Calculate the economic impact of this reduction over a 3-year period, given a continuously compounded interest rate of 11.946997% per year. **Concepts Involved**: - *Continuous Compounding*: This method calculates interest assuming it is reinvested constantly, leading to exponential growth. **Problem Setup**: - **Monthly Revenue Loss**: $100,000 - **Interest Rate**: 11.946997% per annum - **Time Frame**: 3 years Your task is to determine the compounded financial loss over this period, which reflects the cumulative economic impact of reduced delivery capacity on revenue.
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