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 13, Problem 7P

a.

To determine

The better alternative by comparing before tax equivalent annual cost by using the preceding information.

b.

To determine

The better alternative by comparing before tax equivalent annual cost by using the information on annual cost of operations without a truck.

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Mr. Russ T. Steele sells his old vehicle for $5000 (you get more if you private salel) and pays cash for a used (but newer vehicle) that costs $10,000. He also understands that he needs to allow for maintenance and operation costs of his vehicle. He estimates that these costs will be approximately $2000 a year and estimates that the costs will increase by $100 per year. He hopes to keep the vehicle for five years and then sell it for an estimated value of $2000. Mr. Steele has an MARR of 8%. The present value of the cash flow associated with his purchase is most nearly: Oa. -$7,400 b.$-12,400 C $12,000 Od.-$15,100
8 units of milling machine that costs $ 267228 each are bought today. They can be used for 10  years and can be sold at $ 33454 each at the end of their useful life. Lubrications and minor repairs are estimated to be $ 21139 per unit, annually. Each machine is expected to operate at an average of 2978 hours per year at an average power consumption of 1.9 kW per unit. The effective annual interest rate is 2.5%. Assume that the distribution utility charges $ 9/kWhr. Using captalized cost principle, determine the following: a.) captalized cost of the investment, b.) total present worth of all the costs that occur annually (annually recurring cost) in the whole investment, c.) total present worth of all the costs that occur one-time (non-recurring) in the whole investment
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