Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Question
Chapter 10, Problem 21P
(a):
To determine
Calculate the net cash flow.
(b):
To determine
Calculate the annual worth.
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Maintenance money for an athletic complex has been sought. Mr. Kendall, the Athletic Director, would like to solicit a donation to cover all future expected maintenance costs for the building.
These maintenance costs are expected to be $1.2 million each year for the first five years, $1.6 million each year for years 6 through 10, and $1.9 million each year after that. (The building has an
indefinite service life.)
If the money is placed in an account that will pay 7% interest compounded annually, how large should the gift be?
Click the icon to view the interest factors for discrete compounding when i = 7% per year.
The gift should be $31.35 million. (Round to two decimal places.
More Info
N
1
2
3
4
5
67899
10
Single Payment
Compound
Amount
Factor
(F/P, I, N)
1.0700
1.1449
1.2250
1.3108
1.4026
1.5007
1.6058
1.7182
1.8385
1.9672
Present
Worth
Factor
(P/F, I, N)
0.9346
0.8734
0.8163
0.7629
0.7130
0.6663
0.6227
0.5820
0.5439
0.5083
Print
Compound
Amount
Factor
(F/A, I, N)
1.0000
2.0700…
Tanaka Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $401,000
is estimated to result in $147,000 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS schedule) and it
will have a salvage value at the end of the project of $48,000. The press also requires an initial investment in spare parts inventory of
$15,300, along with an additional $2,300 in inventory for each succeeding year of the project. The shop's tax rate is 23 percent and its
discount rate is 10 percent. Calculate the project's NPV.
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
Net present value.
Maintenance money for an athletic complex has been sought. Mr. Kendall, the Athletic Director, would like to solicit a donation to cover all future expected maintenance costs for the building. These maintenance costs are expected to be $1.4 million each year for the first five years, $1.7 million each year for years 6 through 10, and $ million each year after that. (The building has an indefinite service life.) If the money is placed in an account that will pay 5% interest compounded annually, how large should the gift be?
The gift should be $_____million. (Round to two decimal places.)
Chapter 10 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 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 - Prob. 17PCh. 10 - Prob. 18PCh. 10 - Prob. 19PCh. 10 - Prob. 20PCh. 10 - Prob. 21PCh. 10 - Prob. 22PCh. 10 - Prob. 23PCh. 10 - Prob. 24PCh. 10 - Prob. 25PCh. 10 - Prob. 26PCh. 10 - Prob. 27PCh. 10 - Prob. 28PCh. 10 - Prob. 29PCh. 10 - Prob. 30PCh. 10 - Prob. 31PCh. 10 - Prob. 32PCh. 10 - Prob. 33PCh. 10 - Prob. 34PCh. 10 - Prob. 35PCh. 10 - Prob. 36PCh. 10 - Prob. 37PCh. 10 - Prob. 1STCh. 10 - Prob. 2STCh. 10 - Prob. 3STCh. 10 - Prob. 4STCh. 10 - Prob. 5ST
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