Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 7P
To determine
Calculate the time period.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A city government is considering two types of town-dump sanitary systems. Design A requires an initial outlay of $354,000 with annual operating and maintenance costs of $45,000 for the next 16 years; design B calls for an investment of $277,000 with annual operating and maintenance costs of $67,000 per
year for the next 16 years. Fee collections from the residents would again be $90,000 per year. The interest rate is 11%, and no salvage value is associated with either system.
Click the icon to view the interest factors for discrete compounding when /= 11% per year.
(a) Using the benefit-cost ratio BC(), which system should be selected?
The PIA - B is 2.11. (Round to two decimal places.)
Which system should be selected? Choose the correct answer below.
O
Design B
Design A
I
(b) If a new design (design C), which requires an initial outlay of $335,500 and annual operating and maintenance costs of $56,000, is proposed, would your answer in part (a) change?
The PIA -c is 4.39. (Round to two…
Juba city council is considering to construct a sewage management system, the construction of this system will take 3 years before commissioning. the initial capital outlay is estimated to be $10m after commissioning, the juba city council will incur an annual operation and maintenance cost in the amount of $500,000. the sewage management system will generate an annual benefit of $ 2.5m.
the sewage management system will have useful life of 27 years. the city council use 5% discount rate to appraise public project.
Required.
1- compute the present value of the cost and benefits?
2-perform cost benefit analysis to determine whether the project should be undertaken by the City council?
3-Assume you are consulted on this project, advice the city council on how to governed the project.
4- In addition to monetary conditions, what are the other factors to be considered in deciding whether or not the project would be taken?
The city of Oakmont is interested in developing some lake front property into a sports park (picnic facilities, boat docks, swimming area, etc.). A consultant has estimated that the city would need to invest $3 million in this project. In return, the developed property would return $500,000 per year to the city through increased tax revenues and recreational benefits to the public. Whatwould the life of this project need to be in order to be cost-beneficial to the city? The interest rate on municipal bonds is 6% per year.
Chapter 10 Solutions
Engineering Economy (17th Edition)
Ch. 10 - Prob. 1PCh. 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 - Prob. 29FECh. 10 - Prob. 30FECh. 10 - Prob. 31FE
Knowledge Booster
Similar questions
- Consider the two mutually exclusive projects described in the table below. (Note: Each part of the question requires a written answer.) a) Assuming 9% minimum attractive rate of return (MARR), should either of the two projects be accepted? Why? b) Assuming 16% MARR, should either of the two projects be accepted? Why? c) For any positive value of the MARR, divide the possible MARR values into ranges with different decisions; describe and discuss what decision would be made in each range and why. You will need to calculate the crossover rate to determine the precise MARR where the decision changes. Include an NPV profile table and chart to illustrate your answer. Year 0 1 2 3 4 5 Cash Flow Cash Flow Project A Project B -450,000 -700,000 200,000 200,000 150,000 200,000 100,000 200,000 100,000 200,000 75,000 200,000arrow_forwardFor each of the following problems, (a) draw the cash flow diagram; (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box. An existing robot can be kept if $2,000 is spent now to upgrade it for future service requirements. Alternatively, the company can purchase a new robot to replace the old robot. The following estimates have been developed for both the defender and challenger. The company’s MARR is 20% per year. Based on this information? Should the existing robot be replaced now? Assume the robot will be needed for an indefinite period of time. Defender Challenger Current MV $38,000 Purchase Price $51,000 Required Upgrade $2,000 Installation Cost $5,500 Annual Expenses $1,400 Annual Expenses $1,000 Salvage Value - $1,500 Salvage Value $7,000arrow_forwardThree public investment alternatives are available: A1, A2, and A3. Their respective total benefits, costs, and first costs are given in present worth as follows: These alternatives have the same service life. Assuming that there is no donothing alternative, which project would you select, calculating on the basis of the benefit-cost ratio on incremental investment (BC(i))?arrow_forward
- Identify the special cash flow category for each of the following. While developing a new product line, Cook Company spent $3 million two years ago to build a plant for a new product. Ultimately that project was not pursued. You are now evaluating a new project and would locate production inside of this building. What type of cash flow is the cost of the building? You hope to increase membership at your yoga studio by opening a smoothie bar inside of the yoga studio. When considering the feasibility of the smoothie bar, what type of cash flow is the increased studio membership? Suppose Walker Publishing Company is considering bringing out a new finance text whose projected revenues include some revenues that will be taken away from another of Walker's books. What type of cash flow are the lost sales on the older book? You currently operate a taco truck but are considering converting the food truck into a bubble tea truck. What type of cash flow are the profits currently earned…arrow_forwardAn 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 state of Glottamora has $300 million remaining in its budget for the current year. One alternative is to give Glottamorans a one-time tax rebate. Alternatively, two proposals have been made for state expenditures of these funds. The first proposed project is to invest in a new power plant, costing $300 million and having an expected useful life of 20 years. Projected benefits of the new power plant are as follows: Years Benefits per Year ($ Millions) 1 - 5 0 6 - 20 60 The second alternative is to undertake a job retraining program, also costing $100 million and generating the following benefits: Years Benefits per Year ($ Millions) 1 - 5 60 6 - 10 42 11 - 20 12 The state Power Department argues that a 5 percent discount factor should be used in evaluating the projects because that is the government’s borrowing rate. The Human Resources Department suggests using a 12 percent rate because that more nearly equals society’s true…arrow_forward
- You are considering the following project: It pays you $2,500 at the end of the first year, costs $8,500 by the end of the second year and brings $6,800 a year after. What is the project's internal rate of return(s), exact external rate of return and the approximate external rate of return it current MARR is 14%?arrow_forwardA city government is considering two types of town-clump sanitary systems. Design A requires an initial outlay of $400.000 with annual operating and maintenance costs of $50.000 for the next 15 years: design B calls for an investment of $300.000 with annual operating and maintenance coSIS of $80,000 per year for the next 15 years. Fee collections from the residents would be $85.000 per year. The interest rate is 8%. and no salvage value is associated with either system.(a) By the benefit-cost ratio (BC(i)), which system should be selected?(b) If a new design (design C). which requires an initial outlay of $350,000 and annual operating and maintenance costs of $65,000, is proposed, would your answer to (a) change?arrow_forwardAssignment No.3 -G: Benefit/Cost Method 15. The construction cost of the bypass is P20 million, and P500,000 would be required each year for annual maintenance. The annual benefits to the public have been estimated to be P2 million. If the study period is 50 years and the state's interest rate is 8% per year, should the bypass be constructed?arrow_forward
- DPWH is considering building a new expressway going to Bicol to cut the travel time of consumers going south of Luzon. The expressway will be collecting toll from the users of the expressway. The B–C ratio method must be applied in the evaluation. Investment costs of the structure are estimated to be Php 1,000,000,000, and Php 17,000,000 per year in operating and maintenance costs are anticipated. Revenues generated from the toll are anticipated to be Php 125,000,000 in its first year of operation, with a projected annual rate of increase of 3% per year due to the anticipated annual increase in traffic. Using the problem above, assuming zero market (salvage) value for the expressway at the end of 30 years and a MARR of 10% per year, should the expressway be constructed? Solve using PW.arrow_forwardAnswer the given problemarrow_forwardA municipality is investigating the maintenance and refurbishment of the main road through the town . They can either resurface the road every 10 years , or resurface every 15 years but with higher maintenance costs . The municipality uses a 5 % interest rate for their appraisals to include in their applications for the Municipal Infrastructure Grant ( MIG ) . The funding will be available such that construction can be completed by the end of the current financial year . They have determined the following data , but they need you to carry out an economic appraisal as the basis from which to advise them : 10 - year resurfacing cycle Resurfacing : R15 000 000 Maintenance schedule : Year 1-5 : zero Year 6 : R300 000 Year 7 : R600 000 Year 8-10 : R800 000 15 Year resurfacing cycle : Resurfacing : R15 000 000 Maintenance schedule : Year 1-5 : zero Year 6 : R300 000 Year 7 : R600 000 Year 8-10 : R800 000 Year 11-15 : R1 000 000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education