Basics Of Engineering Economy
Basics Of Engineering Economy
2nd Edition
ISBN: 9780073376356
Author: Leland Blank, Anthony Tarquin
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 3, Problem 44P
To determine

Calculate the present worth.

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A 25-year-old person wants to accumulate $750,000 by age 60.  How much will she need to save each month, starting one month from now, if the interest rate is 0.5% per month? (Write the numeric value only, up to 2 decimal places)
You borrow P 3,500.00 for one year from a friend at an interest rate of 1.5% per month instead of taking a loan from a bank at a rate of 18% per year. Compare how much money you will save or lose on the transaction.
You are the manager of a large crude-oil refinery. As part of the refining process, a certain heat exchanger (operated at high temperatures and withabrasive material flowing through it) must be replaced every year. The replacement and downtime cost in the first year is $175,000. This cost is expected to increase due to inflation at a rate of 8% per year for five years, at which time this particular heat exchanger will no longer be needed. If the company’s cost of capital is 18% per year, how much could you afford to spend for a higher quality heat exchanger so that these annual replacement and downtime costs could be eliminated?

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Basics Of Engineering Economy

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