Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 5, Problem 52P
(a):
To determine
Calculate the present worth.
(b):
To determine
Calculate the new present worth.
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An electric utility is taking bids for the purchase, installation, and operation of decentralized battery
storage systems. The table below has some details for the two bids received.
a) Which is the most economical bid if the rate is 11%. None of the batteries are expected to have
a salvage value after 30 years of use. (Actual expected service life is listed in the bid)
b) Also solve using NPW method to compare these two mutually exclusive plans
Equipment cost
Installation cost
Annual Inspection and
Maintenance fee
Annual extra income taxes
Life
Salvage Value
Bid A
$112,000
$25,000
$2,000
0
40 years
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Bid B
$98,000
$30,000
$2,000
$800
35 years
0
The Ford Motor Company is considering three mutually exclusive
electronic stability control systems for protection against rollover of its
automobiles. The investment period is four years (equal lives), and the
MARR is 10% per year. Data for fixturing costs of the systems are given
below. Which alternative should the company select?
Capital
Alternative IRR Investment
A
BC
с
19.7%
19.9%
19.3%
The AW of the alternative A is $
$12,000
$15,700
$8,000
Annual
Receipts
Less
Expenses
$4,000
$5,400
$2,750
Salvage
Value
$3,250
$3,500
$1,600
(Round to the nearest dollar.)
A new manufacturing facility will produce two products, each of which requires a drilling operation during processing. Two alternative types of drilling machines (D1 and D2) are being considered for purchase. One of these machines must be selected. For the same
annual demand, the annual production requirements (machine hours) and the annual operating expenses (per machine) are listed in the table below. Which machine should be selected if the MARR is 12% per year? Assumptions: The facility will operate 1,750 hours per year.
Machine availability 75% for Machine D1 and 70% for Machine D2. The yield of D1 is 90%, and the yield of D2 is 80%. Annual operating expenses are based on an assumed operation of 1,750 hours per year, and workers are paid during any idle time of Machine D1 or
Machine D2. Assume repeatability.
Click the icon to view the alternatives description.
Click the icon to view the interest and annuity table for discrete compounding when i = 12% per year.
The total equivalent…
Chapter 5 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - If a project costs 100,000 and is expected to...Ch. 5 - Refer to Problem 5.2, and answer the following...Ch. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Consider the cash flows from an investment...Ch. 5 - Prob. 10P
Ch. 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 - Consider the project balances in Table P5.19 for a...Ch. 5 - Your RD group has developed and tested a computer...Ch. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Geo-Star Manufacturing Company is considering a...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 - Two methods of carrying away surface runoff water...Ch. 5 - Prob. 44PCh. 5 - Prob. 45PCh. 5 - Prob. 46PCh. 5 - Prob. 47PCh. 5 - Prob. 48PCh. 5 - Prob. 49PCh. 5 - Prob. 50PCh. 5 - Prob. 51PCh. 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 - Prob. 1STCh. 5 - Prob. 2ST
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- A new manufacturing facility will produce two products, each of which requires a drilling operation during processing. Two alternative types of drilling machines (D1 and D2) are being considered for purchase. One of these machines must be selected. For the same annual demand, the annual production requirements (machine hours) and the annual operating expenses (per machine) are listed in the table below. Which machine should be selected if the MARR is 12% per year? Assumptions: The facility will operate 2,000 hours per year. Machine availability is 85% for Machine D1 and 80% for Machine D2. The yield of D1 is 95%, and the yield of D2 is 85%. Annual operating expenses are based on an assumed operation of 2,000 hours per year, and workers are paid during any idle time of Machine D1 or Machine D2. Assume repeatability. Click the icon to view the alternatives description. Click the icon to view the interest and annuity table for discrete compounding when i = 12% per year. The total…arrow_forwardA manufacturing engineer is considering whether to repair or replace a broken machine. The first alternative (Alternative “A”) is to repair the machine with an initial cost of $15,000, an annual maintenance of $700 per year, with no salvage value at the end of its five-year useful life. The second alternative (Alternative “B”) is to replace the machine for $30,000. The maintenance cost starts in the second year at $200 and increases $200 per year in all subsequent years. There is an anticipated salvage value of $5,000 at the end of 20 years. Assuming interest rate is 6% and an analysis period of 20 years, what would be the preferable alternative ?arrow_forwardIBM is considering an environmentally conscious green building at one of its new production facilities. The company will decide among three different green designs for the facility, and each of the final mutually exclusive concepts for the facility results in different costs and savings. These threeconcepts are summarized below. IBM uses 10% per year as its profitability benchmark (hurdle rate) for such comparisons. Which facility concept should be selected?arrow_forward
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