Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
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Chapter 10, Problem 15P
To determine
Calculate the capitalized worth.
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A PAM partner company won a tender to provide clean water distribution facilities in an area that is being developed as a tourist area. There are 2 alternatives that can be taken in implementing the project.
The first alternative requires construction and installation costs of IDR 10 million per kilometer with maintenance costs of IDR 0.35 million per kilometer per year. The remaining value is estimated at IDR 1 million per kilometer at the end of the 20th year.
The second alternative requires construction and installation costs of IDR 7 million per kilometer with maintenance costs of IDR 0.40 million per kilometer per year. The remaining value is estimated at IDR 1.2 million per kilometer at the end of the 20th year.
If the company chooses the first alternative, the length of the pipe that must be installed is 10 kilometers, and if the second alternative the length of the cable is 16 kilometers.
Determine which alternative is more efficient using MARR = 11%!
Engineering Economics (Ilustrative Problem):
A tunnel through a mountain is being considered as a replacement for an existing stretch of highway in southern Mindanao. The existing road is a steep, narrow, winding two-lane highway that has been the site of numerous fatal accidents. The accidents average to 2.05 fatalities and 3.35 “serious injuries” per year. It has been projected that the tunnel will significantly reduce the frequency of accidents, with estimates of not more than 0.15 fatalities and 0.35 “serious injuries” per year. Initial capital investment requirements, including land acquisition, tunnel excavation, lighting, roadbed, and preparation, are estimated to be Php45 M. Annual upkeep costs for the tunnel will be significantly less than for the existing highway, resulting in an annual savings of Php85,000. For purposes of this analysis, a “value per life saved” of Php1 M will be applied, along with an estimate of Php750,000 per “serious injury” for medical costs.
Apply the…
Consider the following assumptions, field
size 640 acres, non-cropped area 5 acres,
2600' total length center pivot cost of
30,000 with a life expectancy of 15 years,
corn selling price of $3.75 per bushel,
expected grain yield of 160 bushels per
acre. If SDI irrigation costs $675 per acre
installed with a life expectancy of 25 years,
expected yield of 160 bushels per acre, you
would be money ahead to install SDI.
True
False
Chapter 10 Solutions
Engineering Economy
Ch. 10 - The Adams Construction Company is bidding on a...Ch. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - A retrofitted space-heating system is being...Ch. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10P
Ch. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16PCh. 10 - Four mutually exclusive projects are being...Ch. 10 - Two municipal cell tower designs are being...Ch. 10 - Prob. 19PCh. 10 - Prob. 20PCh. 10 - Prob. 21PCh. 10 - Prob. 22PCh. 10 - You have been requested to recommend one of the...Ch. 10 - Prob. 24PCh. 10 - Prob. 25PCh. 10 - Prob. 26FECh. 10 - Prob. 27FECh. 10 - Prob. 28FECh. 10 - A flood control project with a life of 16 years...Ch. 10 - Prob. 30FECh. 10 - Prob. 31FE
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- An estimated 6 billion gallons of clean drinking water disappear each day across the United States due to aging, leaky pipes, and water mains before it gets to the consumer or industrial user. The American Society of Civil Engineers (ASCE) has teamed with municipalities, counties, and several excavation companies to develop robots that can travel through mains, detect leaks, and repair many of them immediately. Four proposals have been received for funding. There is a $100 million ($100 M) limit on capital funding and the MARR is established at 12% per year. (a) Use the IROR to rank and determine which of the four independent projects should be funded. (Solve by hand or spreadsheet as instructed.) (b) Determine the rate of return for the projects selected in part (a). (c) Determine the overall rate of return for the projects selected in part (a), assuming that excess funds are invested at the MARR. Is the overall return economically acceptable? First Estimated Annual Project Project…arrow_forwardThe Texas Department of Transportation is considering in improving accident prevention countermeasures on the state's accident-prone public highways and bridges. The following set of projects has been recommended for evaluation at three different locations and assumes the budget is $20 million. All alternatives are mutually independent projects. Determine the best combination of projects within the budget constraint.(a) II-Band III-B only(b) I-A, II-A, and III-B(c) 1-B, III-A, and III-B(d) 11-B and IIl-Barrow_forwardIBM is considering an environmentally conscious green building at one of its new production facilities. The company will decide among three different green designs for the facility, and each of the final mutually exclusive concepts for the facility results in different costs and savings. These threeconcepts are summarized below. IBM uses 10% per year as its profitability benchmark (hurdle rate) for such comparisons. Which facility concept should be selected?arrow_forward
- Recent development near Eugene, Oregon, has identified a need for improved access to Interstate 5 at one location. Civil engineers and public planners are considering three alternative access plans. Benefits are estimated for the public in general; disbenefits primarily affect some local proprietors who will see traffic pattern changes as undesirable. Costs are monetary for construction and upkeep, and savings are a reduction in cost of those operations today that will not be necessary in the future. All figures are relative to the present situation, retention of which is still an alternative, and are annualized over the 20-year planning horizon. Solve, a. What is the B/C ratio for each of these alternatives? b. Using incremental B/C ratio analysis, which alternative should be selected? c. Determine the value of B − C for each alternative.arrow_forwardJill rank-ordered 10 attributes in increasing importance and identified them as A, B, …, J, with a value of 1 assigned to A, 2 to B, etc. (a) What is the sum of the scores? (b) What is the weight for attribute D? (c) Answer the two questions above if Jill decides that attribute D has the same importance as J, but all other scores stay the same.arrow_forwardProblem 1 Two mutually exclusive alternatives are being considered for a site equipment at a petroleum refinery. One of these alternatives must be selected. The firm's MARR is 9% per year. The estimated cash flows for each alternative are below. If the repeatability assumption is made, which alternative is better and what is the AW of the selected alternative? Please round your answer to the nearest integer. Equipment A: • Investment Cost: $77,000 • Annual Revenue: $21,000 • Market Value: $11,000 Useful Life: 9 Years Equipment B: Investment Cost: $28,000 • Annual Revenue: $20,000 • Market Value: $8,000 • Useful Life: 6 Yearsarrow_forward
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