Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
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Chapter 11, Problem 41FE
To determine
Calculate the minimum annual production.
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The Mowbot company wants to add a new
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$750,000 on new equipment and tooling. The
new product line is expected to sell 1,500
units per year for five years. Each unit will
generate $180 in gross profit. At the end of
five years, the equipment will be sold for an
estimated salvage value of $120,000.The
Mowbot company evaluates projects using a
minimum rate of return (MARR) of 18%. Use
present worth analysis to determine whether
this is a viable project. Show the equivalence
formula(s) you use as well as your final
solution.
An integrated, combined cycle power plant produces 285 MW of electricity by gasifying coal. The capital investment for
the plant is $450 million, spread evenly over two years. The operating life of the plant is expected to be 18
years. Additionally, the plant will operate at full capacity 76% of the time (downtime is 24% of any given year). The
MARR is 10% per year.
a. If this plant will make a profit of two cents per kilowatt-hour of electricity sold to the power grid, what is the simple
payback period of the plant? Is it a low-risk venture?
b. What is the IRR for the plant? Is it profitable?
a. The simple payback period of the plant is years. (Round up to one decimal place.)
It's a
venture.
b. The IRR for the plant is%. (Round to one decimal place.)
The plant is
An integrated, combined cycle power plant produces 295 MW of electricity by gasifying coal. The capital investment for the plant is $450 million, spread evenly over two years. The operating life of the plant is expected to be 15 years. Additionally,
the plant will operate at full capacity 72% of the time (downtime is 28% of any given year). The MARR is 8% per year.
a. If this plant will make a profit of two cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low-risk venture?
b. What is the IRR for the plant? Is it profitable?
a. The simple payback period of the plant is 12.1 years. (Round up to one decimal place.)
It's a high-risk venture.
b. The IRR for the plant is %. (Round to one decimal place.)
Chapter 11 Solutions
Engineering Economy
Ch. 11 - Prob. 1PCh. 11 - Refer to Example 11-2. Assuming gasoline costs...Ch. 11 - Prob. 3PCh. 11 - Prob. 4PCh. 11 - Prob. 5PCh. 11 - Prob. 6PCh. 11 - Prob. 7PCh. 11 - Prob. 8PCh. 11 - Prob. 9PCh. 11 - Prob. 10P
Ch. 11 - Prob. 11PCh. 11 - Prob. 12PCh. 11 - Prob. 13PCh. 11 - Prob. 14PCh. 11 - Prob. 15PCh. 11 - You have decided to purchase a new automobile with...Ch. 11 - Prob. 17PCh. 11 - Prob. 18PCh. 11 - Prob. 19PCh. 11 - A bridge is to be constructed now as part of a new...Ch. 11 - An aerodynamic three-wheeled automobile (the Dart)...Ch. 11 - Prob. 23PCh. 11 - Prob. 24SECh. 11 - Prob. 25SECh. 11 - Prob. 26SECh. 11 - Prob. 27SECh. 11 - Prob. 28SECh. 11 - Prob. 29SECh. 11 - Prob. 30FECh. 11 - Prob. 31FECh. 11 - A supermarket chain buys loaves of bread from its...Ch. 11 - A supermarket chain buys loaves of bread from its...Ch. 11 - Prob. 34FECh. 11 - Prob. 35FECh. 11 - Prob. 36FECh. 11 - Prob. 37FECh. 11 - Prob. 38FECh. 11 - Prob. 39FECh. 11 - Prob. 40FECh. 11 - Prob. 41FECh. 11 - Prob. 42FE
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