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 2, Problem 8P
To determine
The expected opprtunity cost of the decision made in the given case.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
I want to be earning an annual salary of $100,000 when I retire in 14 years. I have been offered a job that guarantees an annual salary increase of 4% per year, and the starting salary is negotiable. What is the lowest salary that I should request in order to meet my goal? (Round your answer to the nearest cent.)
it costs $30,000 to retrofit the gasoline pumps at a certain filling station so the pumps can dispense E85 fuel (85% ethanol and 15% gasoline). If the station makes a profit of $0.08 per gallon from selling E85 and sells an average of $20,000 gallons of E85 per month, how many months will it take for the owner to recoup her $30,000 investment in the retrofitted pumps? the interest rate is 1% per month?
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
Susan Jones has a job as a pharmacist earning $45,000 per year, and she is deciding whether to take another job as the manager of another pharmacy for $55,000 per year or to purchase a pharmacy that generates revenue of $350,000 per year. To purchase the pharmacy, Susan would have to use her $20,000 savings and borrow another $90,000 at an interest rate of 8% per year.
The pharmacy that Susan is contemplating purchasing has additional expenses of $100,000 for prescription and non-prescription drugs and lines of women’s and men’s personal hygiene products and cosmetics; $45,000 for one full time person; $20,000 for one part time person; $12,000 for rent; $2,500 for electricity; $1,300 for natural gas; $1,200 for telecommunications; and depreciation and amortization expenses are $5,500.
Assume that income and business taxes are 35% and the repayment of the principal of the loan does not start before three years. Also assume that revenue is expected to grow at 5% per year and expenses at…
Chapter 2 Solutions
Engineering Economy (17th Edition)
Ch. 2 - An experimental composite engine block for an...Ch. 2 - Given below is a numbered list of cost terms. For...Ch. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 7PCh. 2 - Prob. 8PCh. 2 - Prob. 9PCh. 2 - Prob. 10P
Ch. 2 - Prob. 11PCh. 2 - Prob. 12PCh. 2 - Prob. 13PCh. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - Prob. 17PCh. 2 - Prob. 18PCh. 2 - Prob. 19PCh. 2 - Prob. 20PCh. 2 - Prob. 21PCh. 2 - Prob. 22PCh. 2 - Prob. 23PCh. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Suppose you are going on a long trip to your...Ch. 2 - Prob. 28PCh. 2 - Prob. 29PCh. 2 - A company uses a variable speed honing machine to...Ch. 2 - Prob. 31PCh. 2 - An automobile dealership offers to fill the four...Ch. 2 - Prob. 33PCh. 2 - Prob. 34PCh. 2 - Prob. 35PCh. 2 - Prob. 36PCh. 2 - Prob. 37PCh. 2 - Prob. 38PCh. 2 - Prob. 39PCh. 2 - Prob. 40PCh. 2 - Prob. 41PCh. 2 - Prob. 42PCh. 2 - Prob. 43PCh. 2 - Prob. 44PCh. 2 - A hot water leak in one of the faucets of your...Ch. 2 - Prob. 46PCh. 2 - Prob. 47PCh. 2 - Prob. 48SECh. 2 - Prob. 49SECh. 2 - Prob. 50CSCh. 2 - Prob. 51CSCh. 2 - What is the optimal number of units that should be...Ch. 2 - Prob. 53FECh. 2 - Prob. 54FECh. 2 - Prob. 55FECh. 2 - Prob. 56FECh. 2 - Prob. 57FECh. 2 - Prob. 58FE
Knowledge Booster
Similar questions
- A study by the New York Federal Reserve Bank concludes that an engineering bachelor’s degree generates approximately a 15% return on investment over the course of a decade. Suppose the typical engineering student spends $15,000 per year for four years on his/her education. What extra annual return (in dollars) does the typical student realize during the 10 years following graduation? State your assumptions.arrow_forwardShould Jim sell his Minivan? Jim's 1998 minivan is quite functional, but it only averages 20 miles per gallon (mpg). He has found a somewhat newer vehicle (roughly the same functionality) that averages 26 mpg. He can sell his current minivan for $2800 and purchase the newer vehicle for $4,000. Assume a cost of gasoline $4.00 per gallon. How many miles per year must Jim drive if he wants to recover his investment in three years? Assume an interest rate of 6%, zero salvage value for either vehicle after three years, and identical maintenance cost.arrow_forwardA construction manager just starting in private practice needs a van to carry crew and equipment. She can lease a used van for $3,867 per year, paid at the beginning of each year, in which case maintenance is provied. Alternatively, she can buy a used van for $6,427 and pay for maintenance herself. She expects to keep the van for three years at which time she could sell it for $1,251. What is the most she should pay for uniform annual maintenance to make it worthwhile to buy the van instead of leasing it, if her MARR is 20%?arrow_forward
- A construction manager just starting in private practice needs a van to carry crew and equipment. She can lease a used van for $3,938 per year, paid at the beginning of each year, in which case maintenance is provied. Alternatively, she can buy a used van for $5,473 and pay for maintenance herself. She expects to keep the van for three years at which time she could sell it for $1,139. What is the most she should pay for uniform annual maintenance to make it worthwhile to buy the van instead of leasing it, if her MARR is 20%? Enter your answer as follow: 123456arrow_forwardLiam O’Kelly is 20 years old and is thinking about buying a term life insurance policy with his wife as the beneficiary. The quoted annual premium for Liam is $8.48 per thousand dollars of insurance coverage. Because Liam wants a $100,000 policy (which is 2.5 times his annual salary), the annual premium would be $848, with the first payment due immediately (i.e., at age 21). A friend of Liam’s suggests that the $848 annual premium should be deposited in a good mutual fund rather than in the insurance policy. “If the mutual fund earns 10% per year, you can become a millionaire by the time you retire at age 65,” the friend advises. Solve, a. Is the friend’s statement really true? b. Discuss the trade-off that Liam is making if he decides to invest his money in a mutual fund.arrow_forwardYou are an avid 34 year old coffee drinker, and never miss a day without your $4.00 Starbucks caffe latte. However, you also understand the importance of the time value of money and saving for retirement early, so you set a New Year's Resolution to abstain from your coffee-drinking ways this year. At the end of the year, you will place all of your coffee savings in a retirement account. How much will this savings amount to when you retire in 30 years at the age of 65, if invested at a 7.5% annual interest rate (rounded to the nearest dollar)? Assume that the cost of the cup of coffee remains unchanged throughout the year.arrow_forward
- The council members of a small town have decided that the earth levee that protects the town from flooding should be rebuilt and strengthened. The town engineer estimates that the cost of the work at the end of the first year will be $68,000. He estimates that in subsequent years the annual repair costs will decline by $7000, making the second-year cost $61,000; the third-year $54,000, and so forth. The council members want to know what the equivalent present cost is for the first 5 years of repair work if interest is 6%.arrow_forwardLiam O'Kelly is 20 years old and is thinking about buying a term life insurance policy with his wife as the beneficiary. The quoted annual premium for Liam is $8.44 per thousand dollars of insurance coverage. Because Lia, wants a $110,000 policy (which is 2.5 times his annual salary), the annual premium would be $928, with the first payment due immediately (i.e., at age 21). A friend of Liam's suggests that the $928 annual premium should be deposited in a good mutual fund rather than in the insurance policy. "If the mutual fund earns 8% per year, you can become a millionaire by the time you retire at age 65," the friend advises. Is the friend's statement really true? What is the future value of annual premiums deposited in a good mutual fund?arrow_forwardWe know two friends that have decided to work together in a start-up business in Ithaca; they want to open a herbal shop. Dolores used to work as a high school teacher for $40,00 per year but quit in order to start her own catering business. Louis used to work as a high counselor for $30,000 per year but quit in order to start her own catering business They borrowed $30,000 from the bank; the banks charges 10 % interest per year. Interest is paid one time at the end of the year. During the year they will pay $30,000 for ingredients per year and will receive revenue of $100,000 per year. They agreed to share the expenses and revenue. There is no cost in closing the business, and they can return to their former jobs. We learn that they can return to the former jobs anytime they wish. Since they agreed to equally share the accounting profit, will this business survive and should they even try to operate the business based on economic theory?arrow_forward
- A college freshman borrowed P5,000 from a bank for his tuition fee and promised to pay the amount for one year. He received only the amount of P4745 after the bank collected the advance interest. What was the rate of discount?arrow_forwardMary's job position is being transferred to Lexington, Kentucky from Orlando, Florida. She and her husband George are currently renting their home in Orlando, but they have decided that they want to purchase a home in Lexington. Mary's annual salary is $48,500. George has also been able to find employment in Lexington at a factory making $39,000 per year. Mary is a planner and has saved $6200 that she can use towards the down payment on the new house. Use the above information to answer the following questions. Round all answers to 2 decimal places. To save the down payment, Mary deposited monthly in a savings account earning 2.5% compounded monthly. If it took Mary 5 years to save up the down payment, how much money was Mary depositing each month?arrow_forwardYou open a credit card account that charges 1.25% interest each month on the unpaid balance. the effective annual interest rate is:arrow_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:PEARSONEngineering 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 LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial 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