Engineering Economy (16th Edition) - Standalone book
16th Edition
ISBN: 9780133439274
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 49P
(a):
To determine
Calculate the payback period.
(b):
To determine
Calculate the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A 20 kW enclosed motor with a load factor of 70% and an efficiency of 87.5% will be replaced by a new 20 kW enclosed motor operating at the same load factor, but will now have a higher efficiency of 91%. How many kW of power savings will be obtained from this project?
An integrated, combined cycle power plant produces 295 MW of electricity by gasifying coal. The capital investment for the plant is $450 million, spread evenly over two years. The operating life of the plant is expected to be 15 years. Additionally,
the plant will operate at full capacity 72% of the time (downtime is 28% of any given year). The MARR is 8% per year.
a. If this plant will make a profit of two cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low-risk venture?
b. What is the IRR for the plant? Is it profitable?
a. The simple payback period of the plant is 12.1 years. (Round up to one decimal place.)
It's a high-risk venture.
b. The IRR for the plant is %. (Round to one decimal place.)
The purchase of a motor for $11,823.97 and a generator for $6,415.31 will allow a company to produce its own energy. The configuration can be assembled for $1,036.99. The service will operate for 2,920.98 hours/year for 10 years. The maintenance cost is $300/year, and the cost to operate is $0.85/h for fuel and related costs. There is $458.02 in salvage value for the system at the end of 10 years. Using straight line depreciation, what is the annual cost for the operation?
Chapter 5 Solutions
Engineering Economy (16th Edition) - Standalone book
Ch. 5.A - Use the ERR method with = 8% per year to solve for...Ch. 5.A - Apply the ERR method with = 12% per year to the...Ch. 5.A - Are there multiple IRRs for the following...Ch. 5.A - Are there multiple IRRs for the following cash...Ch. 5 - Tennessee Tool Works (TTW) is considering...Ch. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - A large induced-draft fan is needed for an...
Ch. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10PCh. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Determine the FW of the following engineering...Ch. 5 - Prob. 22PCh. 5 - Fill in Table P5-23 below when P = 10,000, S = 2,...Ch. 5 - Prob. 24PCh. 5 - A simple, direct space heating system is currently...Ch. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Stan Moneymaker has been informed of a major...Ch. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 37PCh. 5 - Prob. 38PCh. 5 - Prob. 39PCh. 5 - Prob. 40PCh. 5 - Prob. 41PCh. 5 - Prob. 42PCh. 5 - Prob. 43PCh. 5 - To purchase a used automobile, you borrow 10,000...Ch. 5 - Your boss has just presented you with the summary...Ch. 5 - Experts agree that the IRR of a college education...Ch. 5 - A company has the opportunity to take over a...Ch. 5 - The prospective exploration for oil in the outer...Ch. 5 - Prob. 49PCh. 5 - An integrated, combined cycle power plant produces...Ch. 5 - A computer call center is going to replace all of...Ch. 5 - Prob. 52PCh. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - Prob. 55PCh. 5 - Prob. 56PCh. 5 - Prob. 57PCh. 5 - Prob. 58PCh. 5 - Prob. 59PCh. 5 - a. Calculate the IRR for each of the three...Ch. 5 - Prob. 61PCh. 5 - Prob. 62PCh. 5 - Prob. 63PCh. 5 - Prob. 64SECh. 5 - Prob. 65SECh. 5 - Prob. 66SECh. 5 - A certain medical device will result in an...Ch. 5 - Refer to Problem 5-61. Develop a spreadsheet to...Ch. 5 - Prob. 69CSCh. 5 - Prob. 70CSCh. 5 - Suppose that the average utilization of the CVD...Ch. 5 - Prob. 72FECh. 5 - Prob. 73FECh. 5 - Prob. 74FECh. 5 - Prob. 75FECh. 5 - Prob. 76FECh. 5 - Prob. 77FECh. 5 - Prob. 78FECh. 5 - Prob. 79FECh. 5 - A new machine was bought for 9,000 with life of...Ch. 5 - Prob. 81FECh. 5 - Prob. 82FECh. 5 - Prob. 83FECh. 5 - Refer to Problem 5-2. Assuming the residual value...
Knowledge Booster
Similar questions
- An environmentally friendly 3,100-square-foot green home (99% air tight) costs about 8% more to construct than a same-sized conventional home. Most green homes can save 14% per year on energy expenses to heat and cool the living space. For a $261,000 conventional home with a heating and cooling bill of $3,000 per year, how much would have to be saved in energy expenses per year to justify this home (i.e., B-C ratio greater than or equal to one)? The discount rate is 11% per year, and the expected life of the home is 23 years. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11% per year. would have to be saved in energy expenses per year to justify this home. (Round to the nearest dollar.)arrow_forwardAn integrated, combined cycle power plant produces 290 MW of electricity by gasifying coal. The capital investment for the plant is $530 million, spread evenly over two years. The operating life of the plant is expected to be 15 years. Additionally, the plant will operate at full capacity 74% of the time (downtime is 26% of any given year). The MARR is 5% per year. a. If this plant will make a profit of three cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low-risk venture? b. What is the IRR for the plant? Is it profitable?arrow_forwardAn integrated, combined cycle power plant produces 280 MW of electricity by gasifying coal. The capital investment for the plant is $460 million, spread evenly over two years. The operating life of the plant is expected to be 25 years. Additionally, the plant will operate at full capacity 77% of the time (downtime is 23% of any given year). The MARR is 8% per year. a. If this plant will make a profit of two cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low-risk venture? b. What is the IRR for the plant? Is it profitable? a. The simple payback period of the plant is years. (Round up to one decimal place.) It's a venture. b. The IRR for the plant is %. (Round to one decimal place.) The plant isarrow_forward
- A steam boiler is required as part of the design of a new plant. The types of fuel that can be used to ignite the boiler are natural gas, fuel oil, and coal. The cost of installation including all required controls is $40,000 for natural gas, $50,000 for fuel oil, and $120,000 for coal. In addition, the annual cost of fuel oil is $8,000 less than the annual cost of natural gas and $12,000 more than the annual cost of coal. The boiler is to be utilized for 20 years and interest rate is 8%. Using the most suitable approach, determine the best alternative. Is there any other consideration for the obtained result? As one way, please solve using either Cash Flow Analysis, Present Worth Analysis, or any other similar method. As a second way, use Excel software and include all required command statements require to solve it.arrow_forwardA young engineer is considering establishing his own company. An investment pfP500,000 will be required, which will be recovered in 15 ears. It is estimated that sales will be P800,000 per year and the operating expenses will be as follows: Materials P160.000 per year Labor P280.000 per vear Overhead P40.000 + 10% of sales per year Selling expenses P60,000 per year The engineer will give up his regular job paying P216,000 per year and devote full time to the operation of the business; this will result in decreasing labor cost by P40,000 per year, material cost by P28,000 per year, and overhead cost by P32,000 per year. If the engineer expects to earn at least 20% of his capital, should he invest? (Use ROR method for your solution)arrow_forwardIn certain cases, experience will indicate the best time to perform certain operations to maintain equipment at the highest level of efficiency. A machine used for cutting materials in a factory has the ff outputs per hour at various speeds and requires periodic tool regrinding at the intervals cited. Speed Output per Hour Tool Regrinding A 200pcs Every 8 hrs B 250pcs Every 7 hrs C 280pcs Every 5 hrs A set of tools costs P1,800 and can be ground twenty times. Each regrinding costs P18 and the time needed to regrind and change tools is 1 hour. The machine operator is paid P28 per hour, including the time the tool is changed. The tool grinder who also sets the tools to the machine is paid P25 per hour. The hourly rate chargeable against the machine is P54, regardless of machine speed. What is the total cost of Speed B.arrow_forward
- A small Queensland farming company is contemplating whether to invest in a new irrigation system for their farmland. Currently their crop yields 45 tonnes that can be sold at $950 per tonne. The investment is projected to boost crop yields by 10% per year for a decade. The irrigation project entails an initial investment of $100,000 and requires an annual maintenance cost of $20,000 per year. The company has already spent $50,000 on a previous project that was unsuccessful. Assume a discount rate of 4% and a tax rate of 30%. a) Find the Market Perspective result. NPV = $ IRR = % Show your calculations in your spreadsheet.arrow_forwardAn integrated, combined cycle power plant produces 285 MW of electricity by gasifying coal. The capital investment for the plant is $530 million, spread evenly over two years. The operating life of the plant is expected to be 18 years. Additionally, the plant will operate at full capacity 76% of the time (downtime is 24% of any given year). The MARR is 7% per year. a. If this plant will make a profit of two cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low-risk venture? b. What is the IRR for the plant? Is it profitable? a. The simple payback period of the plant is 14 years. (Round up to one decimal place.) It's a high-risk venture. b. The IRR for the plant is %. (Round to one decimal place.) CHEarrow_forwardA food processing plant consumed 600,000 kW of electric energy annually and pays an average of P2.50 per kWh. A study is being made to generate its own power to supply the plant the energy required, and that the power plant installed would cost P2,000,000. Annual operation and maintenance, P800,000. Other expenses P100,000 per year. Life of power plant is 15 years; salvage value at the end of life is P200,000; annual taxes and insurances, 6% of the first cost; and rate of interest is 15%. Using the sinking fund method for depreciation, what is the cost savings/loss if the power plant is to be generated (indicated negative(-) sign if the cost is a loss) using the Present Worth Method.arrow_forward
- A machine used for cutting materials in a factory has the following outputs perhour at various speeds and required periodic tool regrinding at the intervals cited .Speed Output per hour Tool regrinding A 200 pieces Every 8 hours B 280 pieces Every 5 hours A set of tools costs P560 and can be ground twenty times. Each regrinding costs P54.00 and the time needed to regrind and change tools is 1 hour. The machine operator is paid P35.00 per hour including the time the tool is changed. The tool grinder who also sets the tools to the machine is paid P40.00 per hour. The hourly rate chargeable against the machine is P38.00, regardless of machine speed. Which speed is more economical? Speed B, PO.096/pc Speed B. PO.087/pc Speed A, P.054/pc Speed A, P.037/pcarrow_forwardAn integrated, combined cycle power plant produces 285 MW of electricity by gasifying coal. The capital investment for the plant is $700 million, spread evenly over two years. The operating life of the plant is expected to be 15 years. Additionally, the plant will operate at full capacity 77% of the time (downtime is 23% of any given year). The MARR is 7% per year. a. If this plant will make a profit of three cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant?.arrow_forwardABC Corporation will be making a $100,000 payment and a collection of the same amount. The buying spot rate for a USD is P52.10 and the selling spot rate is P52.35. By matching the collection and the payment, ABC was able to make cost savings of how much?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: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