ENGINEERING ECONOMIC ENHANCED EBOOK
ENGINEERING ECONOMIC ENHANCED EBOOK
14th Edition
ISBN: 9780190931940
Author: NEWNAN
Publisher: OXF
Question
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Chapter 1, Problem 60P

(a)

To determine

The speed at which the 525 miles trip will be completed.

(a)

Expert Solution
Check Mark

Answer to Problem 60P

The cost is lower at 70 mph as compared to 60 mph, hence speed should be 70 miles per hour.

Explanation of Solution

To determine the optimum level of speed at which 525miles trip will be done, we need to compare the total cost to be incurred at both the speed levels.

At 60 mph

  If 1 gallon gives 29 miles per hour, then 525 miles will require: = 525 29 = 18.1 gallons of gasIf 60 miles is covered in 1 hour, then 525 miles will take: = 525 60 = 8.75 hours

At 70 mph

  If 1 gallon gives 25 miles per hour, then 525 miles will require: = 525 25 = 21 gallons of gasIf 70 miles is covered in 1 hour, then 525 miles will take: = 525 70 = 7.5 hours

Calculation of cost:

If gas has $3 cost and time is $18 per hour:

At 60 mph speed:

   Cost of gas= 3×18.1 = $54.3 Cost of time= 18×8.75 = $157.5 Hence, total cost= $54.3 + $157.5 = $211.8

At 70 mph speed:

   Cost of gas= 3×21  = $63 Cost of time= 18×7.5  = $135 Hence, total cost= $63 + $135  = $198

Since cost is lower at 70 miles per hour, speed should be 70 miles per hour.

(b)

To determine

The speed at which the 525miles trip will be completed.

(b)

Expert Solution
Check Mark

Answer to Problem 60P

The cost is lower at 70 mph as compared to 60 mph, hence speed should be 70 miles per hour.

Explanation of Solution

To determine the optimum level of speed at which 525 miles trip will be done, we need to compare the total cost to be incurred at both the speed levels.

Calculation of cost:

If gas has $4 cost and time is $12 per hour:

At 60 mph speed:

   Cost of gas= 4×18.1  = $72.41 Cost of time= 12×8.75  = $105 Hence, total cost= $72.4 + $105  = $177.41

At 70 mph speed:

   Cost of gas= 4×21  = $84 Cost of time= 12×7.5  = $90 Hence, total cost= $84 + $90  = $174

Since cost is lower at 70 miles per hour, speed should be 70 miles per hour.

(c)

To determine

The speed at which the 525 miles trip will be completed.

(c)

Expert Solution
Check Mark

Answer to Problem 60P

The cost is lower at 60 mph as compared to 70 mph, hence speed should be 60 miles per hour.

Explanation of Solution

To determine the optimum level of speed at which 525 miles trip will be done, we need to compare the total cost to be incurred at both the speed levels.

Calculation of cost:

If gas has $5 cost and time is $9 per hour:

At 60 mph speed:

   Cost of gas= 5×18.1  = $90.5 Cost of time= 9×8.75  = $78.75 Hence, total cost= $90.5 + $78.75  = $169.25

At 70 mph speed:

   Cost of gas= 5×21  = $105 Cost of time= 9×7.5  = $67.5 Hence, total cost= $105 + $67.5  = $172.5

Since cost is lower at 60 miles per hour, speed should be 60 miles per hour.

(d)

To determine

To build a spreadsheet showing the calculation of total trip cost at various rates of gas costs and time cost for 60mph speed and 70mph speed.

(d)

Expert Solution
Check Mark

Answer to Problem 60P

The tables reflect the total trip cost at both the speed levels of 60 mph and 70 mph considering various rates of gas cost and time costs given in the question

Explanation of Solution

    At 60 mph considering 18.1 gallons and 8.75 hrs.
     2345
    6$88.7$106.8$124.9$143.0
    9$115.0$133.1$151.2$169.3
    12$141.2$159.3$177.4$195.5
    15$167.5$185.6$203.7$221.8
    18$193.7$211.8$229.9$248.0
    At 70 mph considering 21 gallons and 7.5 hrs.
     2345
    6$87.0$108.0$129.0$150.0
    9$109.5$130.5$151.5$172.5
    12$132.0$153.0$174.0$195.0
    15$154.5$175.5$196.5$217.5
    18$177.0$198.0$219.0$240.0

The tables above reflect the total trip cost at both the speed levels of 60 mph and 70 mph considering various rates of gas cost and time costs given in the question.

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Students have asked these similar questions
Consider a call option on a stock that does not pay dividends. The stock price is $100 per share, and the risk-free interest rate is 10%. The call strike is $100 (at the money). The stock moves randomly with u=2 and d=0.5. 1. Write the system of equations to replicate the option using A shares and B bonds. 2. Solve the system of equations and determine the number of shares and the number of bonds needed to replicate the option. Show your answer with 4 decimal places (x.xxxx); do not round intermediate calculations. This is easy to do in Excel. A = B = 3. Use A shares and B bonds from the prior question to calculate the premium on the option. Again, do not round intermediate calculations and show your answer with 4 decimal places. Call premium =
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