Basics Of Engineering Economy
2nd Edition
ISBN: 9780073376356
Author: Leland Blank, Anthony Tarquin
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 59P
To determine
Calculate the present worth.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
D
Equipment needed at Valero Corporation refinery for the conversion of corn stock toethanol, a cleaner burning gasoline additive, will cost $175,000 and have net cashflows of $35,000 the first year, increasing by $10,000 per year over the life of 5 years.Develop a spreadsheet chart that plots AW vs interest rate to show where (what interestrate) the project switches from financially justified to unjustified. Use AW as the verticalaxis of the chart, and interest (i) as the horizontal axis of the chart. Use a range ofinterest rates spanning from 10% to 20%, and use increments of 1%. Label both axesand use a title for the chart.
Most likely estimates for a project are as follows.
MARR
Useful life
Initial investment
Receipts - Expenses (R-E)
10% per year
14 years
$6,500
$1,100/year
Click the icon to view the relationship between the PW and the percent change in parameter.
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year.
(a) Determine whether the statement "An initial investment of $7,150 keeps the investment economical." is true or false.
False
True
(b) To which variable is the PW most sensitive to?
A. Receipts Expenses
B. Initial Investment
C. Usefule life
Chapter 4 Solutions
Basics Of Engineering Economy
Ch. 4 - State two conditions under which the do-nothing...Ch. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7PCh. 4 - Prob. 8PCh. 4 - Prob. 9PCh. 4 - The costs associated with manufacturing a...
Ch. 4 - Prob. 11PCh. 4 - Prob. 12PCh. 4 - Prob. 13PCh. 4 - Prob. 14PCh. 4 - Prob. 15PCh. 4 - Prob. 16PCh. 4 - Prob. 17PCh. 4 - Prob. 18PCh. 4 - Prob. 19PCh. 4 - Prob. 20PCh. 4 - Prob. 21PCh. 4 - Prob. 22PCh. 4 - Prob. 23PCh. 4 - Prob. 24PCh. 4 - Prob. 25PCh. 4 - Prob. 26PCh. 4 - Prob. 27PCh. 4 - Prob. 28PCh. 4 - Prob. 29PCh. 4 - Prob. 30PCh. 4 - Prob. 31PCh. 4 - Two mutually exclusive projects have the estimated...Ch. 4 - Prob. 33PCh. 4 - Prob. 34PCh. 4 - Prob. 35PCh. 4 - Prob. 36PCh. 4 - Prob. 37PCh. 4 - The manager of engineering at the 900-megawatt...Ch. 4 - Prob. 39PCh. 4 - Prob. 40PCh. 4 - Prob. 41PCh. 4 - Three different plans were presented to the GAO by...Ch. 4 - The U.S. Army received two proposals for a turnkey...Ch. 4 - Prob. 44PCh. 4 - Prob. 45PCh. 4 - Prob. 46PCh. 4 - Prob. 47PCh. 4 - Prob. 48PCh. 4 - Prob. 49PCh. 4 - Prob. 50PCh. 4 - Prob. 51PCh. 4 - Prob. 52PCh. 4 - Prob. 53PCh. 4 - Prob. 54PCh. 4 - Prob. 55PCh. 4 - Prob. 56PCh. 4 - Prob. 57PCh. 4 - Prob. 58PCh. 4 - Prob. 59PCh. 4 - Prob. 60PCh. 4 - Prob. 61PCh. 4 - Prob. 62PCh. 4 - Prob. 63APQCh. 4 - Prob. 64APQCh. 4 - Prob. 65APQCh. 4 - Prob. 66APQCh. 4 - Prob. 67APQCh. 4 - Prob. 68APQCh. 4 - Prob. 69APQCh. 4 - Prob. 70APQCh. 4 - Prob. 71APQ
Knowledge Booster
Similar questions
- A construction company is planning to invest for the purchase of a heavy construction equipment which will be used at a construction site. There are three feasible alternatives and the detailed cash flow of all the alternatives are presented in the table. Each alternative has the useful life of 8 years. If the company's MARR is 12% per year, use an appropriate rate of return method to determine which alternative, if any, the company should choose. Alternatives 1 2 3 Initial investment ($) 2 700 000 3 200 000 2 400 000 Annual saving Salvage value Useful life (Years) ($) 525 000 640 000 415 000 ($) 710 000 860 000 590 000 8 8 8arrow_forwardAn assembly operation at a software company now requires $100,000 per year in labor costs. A robot can be purchased and installed to automate this operation. The robot will cost $200,000. Maintenance and operation expenses of the robot are estimated to be $64,000 per year for the first 2 years and $10,000 thereafter. Replacement of minimal parts will cost $5000 every 3 years. Invested capital must earn at least 12% per year. What is the capitalized cost? (Draw cash flow diagram and show complete solution)arrow_forwardMost likely estimates for a project are as follows. MARR Useful life Initial investment Receipts - Expenses (R-E) 10% per year 9 years $5,000 $1,200/year Click the icon to view the relationship between the PW and the percent change in parameter. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. (b) To which variable is the PW most sensitive to? OA. Receipts - Expenses OB. Usefule life OC. Initial Investment (a) Determine whether the statement "An initial investment of $6,000 keeps the investment economical." is true or false. O False O Truearrow_forward
- An investment broker that Ava trusts recommended that she purchase a $50,0 00, 15-year municipal bond that generates a dividend of 4% per year payable quarterly. She will pay a discounted amount of $45,000 now for the bond. In general, Ava hopes to make 8 % per year compounded quarterly on her investments. Using the PW value, determine if this is a financially advantageous investment for her. Solve with factors. The present worth isarrow_forwardVeer Don't upload any imagearrow_forwardSelect the best option using Rate of Return Analysis (incremental Rate of Return) \table[[MARR, 20%,,,], [Useful Life, 5 years,,,], [Brand, D1, D2, D3, D4]] \table[[\table[[Capital], [Investment]], $100,00, $140, 600, $148, 200, $122,000. Solve using excel spreadsheet. ف c 3. Select the best option using Rate of Return Analysis (incremental Rate of Return) MARR Useful Life Brand 20% 5 years D1 D2 D3 D4 Capital $100,00. $140,600 $148,200 $122,000 Investment Annual Expenses $29,000 $16,900 $14,800 $22,100 Salvage $10,000 $14,000 $25,600 $14,000arrow_forward
- Determine the following for the quarterly cash flow estimates. (a) i* value or values; (b) if an MARR of 5% per quarter is achievable; and (c) the minimum revenue in quarter 8 that will generate an i* that meets the MARR. Quarter Expenses, $ Revenues, $ 0 −20 0 1 −20 5 2 −10 10 3 −10 25 4 −10 26 5 −10 20 6 −15 17 7 −12 15 8 −15 2arrow_forwardAn engineer launches a project in the country's top technohub. This involves rental of a computer unit for online class students. He felt that because of the density of students in the area, 90% of his 30-units will be occupied per sem (5 months each) per year. He desires a rate of return of 20%. Other pertinent data are the following: Assess the project using (1) ROR, (2) Present Worth Method, and (3) Future Worth Method. (4) Estimate the payback period of this project. Help me solve this manually.arrow_forwardces Three different plans were presented to the Ahbhalet Corporation for operating an identity-theft scanning system. Plan A involves renewable 1-year contracts with payments of $1 million at the beginning of each year. Plan B is a 2-year contract that requires four payments of $600,000 each, with the first one made now and the other three at 6-month intervals. Plan C is a 3-year contract that entails payment of $1.5 million now and the second payment of $0.5 million 2 years from now. Assuming that the company could renew any of the plans under the same payment conditions, determine which plan is best on the basis of a PW analysis at a MARR of 6% per year compounded semiannually. The present worth of plan A is $ the present worth of plan B is $ and the present worth of plan C is $ The best plan on the basis of the present worth analysis is plan Carrow_forward
- E4 An engineer at Delphi Systems is considering the projects below, all of which can be considered to last indefi nitely. The company’s MARR is 13% per year. (a) Determine which projects should be selected on the basis of IROR if the budget limitation is $39,000. (b) What is the overall rate of return if the money not invested in projects is assumed to earn a rate of return equal to the MARR?arrow_forwardincremental rate of return analysis MARR = 20% %3| 1st 0=-8000 + 12.886,63(P/A,i*,15) + 533,33(P/Fi",15) I*= ? 2nd 0=-2800 + 864,87(P/A,i",15) + 186,67(P/F,i*,15) 1*= ? 3rd 0=-2960 + 1297,32(P/A,i*,15) + 197,33(P/F,i*,15) |*= ? wie 4th 0=-1040 + 2767,6(P/A,i*,15) + 69,33(P/E.i*,15) I*2 0=-2000 + 2508,13(P/A.i*,15)+ 133,34(P/E.i*,15) I*= ?arrow_forwardSelf-tightening wedge grips are designed for tensile testing applications up to 1200 pounds. The cash flows associated with the product are available below. Determine the following from these values: net cash flow series, cumulative cash flow series, and i* displayed by the IRR spreadsheet function, if an option for “guess” is not entered. Year 1 2 3 4 Revenue 25,000 13,000 4,000 70,000 Costs −30,000 −7,000 −6,000 −12,000arrow_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:PEARSON
Engineering 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 Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial 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