Engineering Economy (16th Edition) - Standalone book
Engineering Economy (16th Edition) - Standalone book
16th Edition
ISBN: 9780133439274
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Chapter 11, Problem 30FE
To determine

Calculate the maximum acceptable cost.

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A car is needed for three years. Plans A and B for acquiring the car are being evaluated. An effective annual interest rate of 10% is to be used. Which plan is economically superior?   Plan A: Lease the car for $0.25/mile (all inclusive)   Plan B: Purchase the car for $30,000. Keep the car for three years. Sell the car after three years for $7200. Pay $0.14 per mile for oil and gas. Pay other costs of $500 per year.
A bridge is to be constructed now as part of a new road. Engineers have determined that current traffic volume on the new road will justify a two-lane road and a bridge at the present time. Because of the uncertainty regarding future traffic, the time at which the additional two lanes will be required is currently being studied. Two alternatives are being considered. Alternative 1 - One-stage construction: Build a four lane bridge right now for $360,000. Alternative 2 - Two-stage construction: Start with a two-lane bridge now for $170,000 and widen to four lanes later when traffic justifies. The future cost of widening the bridge to four-lanes at that time will be $170,000 plus an extra $23,000 for every year that widening is delayed. For example, if future widening is done at the end of year 7, the cost of widening at that time will be equal to $170,000 + 7x($23,000) = $331,000. The following estimates have been made of when widening to a four-lane bridge will be required: Pessimistic…
solve it using manual computation; do not use Microsoft Excel   The Ajax Corporation has an overhead crane that has an estimated remaining life of 10  years. The crane can be sold now for $8,000. If the crane is kept in service, it must be overhauled immediately at a cost of $5,000. Operating and maintenance costs will be $3,000 per year after the crane is overhauled. The overhauled crane will have zero MV at the end of the 8-year study period. A new crane will cost $20,000, will last for 8 years, and will have a $4,000 MV at that time. Operating and maintenance costs are $1,000 per year for the new crane. The company uses a before-tax interest rate of 10% per year in evaluating investment alternatives. Should the company replace the old crane?
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