Engineering Economy, Student Value Edition (17th Edition)
Engineering Economy, Student Value Edition (17th Edition)
17th Edition
ISBN: 9780134838137
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Chapter 10, Problem 1P
To determine

Calculate the Benefit cos ratio.

Expert Solution & Answer
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Explanation of Solution

Time period is denoted by n and the interest is denoted by i. Benefit cost ratio (BC)can be calculated as follows.

BC=Annual receiptAnnual expenseInvestment(i(1+i)n(1+i)n1)Salvage value(i(1+i)n1)=100,00050,000200,000(0.15(1+0.15)10(1+0.15)101)10,000(0.15(1+.15)101)=1.27   

The benefit cost ratio is 1.27. Since the BC value is greater than 1, it is acceptable project.

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The figure below shows the hypothetical domestic supply and demand for baseball caps in the country of Spain. Domestic Supply and Demand for Baseball Caps Price (€ per cap) 10 9 8 7 6 5 4 3 2 1 0 Spain Dd 10 20 30 40 50 60 70 80 90 100 Baseball caps (thousands per month) Suppose that the world price of baseball caps is €2 and there are no import restrictions on this product. Assume that Spanish consumers are indifferent between domestic and imported baseball caps. Instructions: Enter your answers as whole numbers. a. What quantity of baseball caps will domestic suppliers supply to domestic consumers? thousand b. What quantity of baseball caps will be imported? thousand Now suppose a tariff of €1 is levied against each imported baseball cap. c. After the tariff is implemented, what quantity of baseball caps will domestic suppliers supply to domestic consumers? thousand d. After the tariff is implemented, what quantity of baseball caps will be imported? thousand
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