Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Chapter 1, Problem 17P
To determine
The other factors that could justify the surveilance software.
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A company is considering investing in a new machine that makes the production process more efficient. The machine costs $15,000 and will lower the variable unit costs by $2. The goal of the investment is to increase production, allowing the company to benefit from the experience curve and selling the product $3 cheaper than the current price of $38. What is the percentage change in the number of units sold if the company wants to maintain its profitability? Assume it is currently producing 10,000 units of the product and has a current contribution of $10 per unit sold.
The Fly-by-Night finance company advertises a "bargain 6% plan" for financing the purchase
of automobiles. To the amount of the loan being financed, 6% is added for each year money is
owed. This total is then divided by the number of months over which the payments are to be
made, and the result is the amount of the monthly payments. For example, a woman
purchases a $10,000 automobile under this plan and makes an initial cash payment of $2,500.
She wishes to pay the $7,500 balance in 24 monthly payments: Find the IRR and Effective
Annual Interest rate.
Purchase price
-Initial payment
= Balance due, (Po)
+6% finance charge = 0.06 × 2 years × $7,500
= Total to be paid
.. Monthly payments (A) = $8,400/24
=
$10,000
2,500
7,500
900
8,400
$350
Automobile repair shops typically recommend that their customers change their oil and oil filter every 3000 miles. Your automobile user’s manual suggests changing your oil every 5000-7000 miles.If you drive your car 15,000 miles each year and an oil and filter change costs $30, how much money would you save each year if you had this service performed every 5,000 miles.
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