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 5, Problem 26P
To determine

Calculate the Investment.

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An engineer working for GE invested his bonus money each year in company stock. His bonus has been $5000 each year for the past 6 years (i.e., at the end of years 1 through 6). At the end of year 7, he sold $9000 worth of his stock to remodel his kitchen (he didn’t purchase any stock that year). In years 8 through 10, he again invested his $5000 bonus. The engineer sold all his remaining stock for $50,000 immediately after the last investment at the end of year 10. (a) Determine the number of possible rate of return values in the net cash flow series. (b) Find the internal rate of return(s). (c) Determine the composite rate of return. Use a reinvestment rate of 20% per year.
At the beginning of Year 1 Timmy purchased a 200-acre farm in Oldham County, Texas. He immediately proceeded to begin growing crops for sale. He irrigates his crops using water from the Ogallala formation.   At the time of purchase, Timmy was advised by a qualified hydrologist that there were approximately 200,000,000 cubic meters of recoverable Ogallala water under his farm. On the basis of this report Timmy, on your advice, allocated $6 million of his $20 million purchase price to the water.   At the very beginning of Year 2 the hydrologist came back and estimated that as of that time there remained 194,000,000 cubic meters of recoverable water under Timmy’s farm. Calculate and explain Timmy’s Year 1 cost depletion deduction.   ReplyForward
Five years ago, Logocom made a $5 million investment in a new high-temperature material. The product was not well accepted after the first year on the market. However, when it was reintroduced 4 years later, It did sell well during the year. Major research funding to broaden the applications has cost $15 million in year 5. Determine the rate of return for these net cash flows (in $1.000 units). Year NCF, $1000 -5,000 4,500 4 21,500 -15,000 The rate of return is % per year.
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