Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 5, Problem 12P
To determine

Calculate the maximum price for machine.

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A California utility firm is considering building a 50-megawatt geothermalplant that generates electricity from naturally occurring underground heal. The binary geothermal system will cost $85 million to build and $6 million (including any income-tax effect) to operate per year. (Unlike a conventional fossilfuel plant, this system will require virtually no fuel costs.) The geothermal plant is to last 25 years. At the end of that time, the expected salvage value will be about the same as the cost to remove the plant. The plant will be in operation for 70% (the plant-utilization factor) of the year (or 70% of 8,760 hours per year). If the firm's MARR is 14% per year, determine the cost of generating electricity per kilowatt-hour.
You invest in a piece of equipment costing $30,000. The equipment will be used for two years, at the end of which time the salvage value of the machine is expected to be $10,000. The machine will be used for 5,000 hours during the first year and 8,000 hours during the second year. The expected annual net savings in operating costs will be $25,000 during the first year and $40,000 during the second year. If your interest rate is 10%, what would be the equivalent net savings per machine-hour? Solved in Excel is perfered!
Maintenance money for an athletic complex has been sought. Mr.​ Kendall, the Athletic​ Director, would like to solicit a donation to cover all future expected maintenance costs for the building. These maintenance costs are expected to be ​$1.4 million each year for the first five​ years, ​$1.7 million each year for years 6 through​ 10, and ​$ million each year after that.​ (The building has an indefinite service​ life.) If the money is placed in an account that will pay ​5% interest compounded​ annually, how large should the gift​ be?   The gift should be $_____million.​ (Round to two decimal​ places.)
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