Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 5, Problem 6P
A large induced-draft fan is needed for an upgraded industrial process. The motor to drive this fan is rated at 100 horsepower, and the motor will operate at full load for 8,760 hours per year. The motor’s efficiency is 92%. Because the motor is fairly large, a demand charge of $92perkilowatt per year will be incurred in addition to an energy charge of $0.08 per kilo-watt-hour. If the installed cost of the motor is $4,000, what is the present worth of the motor over a 10-year period when the MARR is 15% per year? (5.3)
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
an engineer knows that the supplier of their set-5100 laser surface metrology system used on one of their lines superseded their 5100 model with the 5105. the new model has a net cost of $420000. adding the new 5105 model to the production line would in decrease scrap rate estimated to save 630000 in the first year. the rate of return for on the set-5105 purchase is 13% MEMD IS 15% what is the opportunity cost
←
An oil refinery finds that it is necessary to treat the waste liquids from a new process before discharging them into a stream. The treatment will cost $40,000 the first year, but
process improvements will allow the costs to decline by $4,000 each year. As an alternative, an outside company will process the wastes for the fixed price of $20,000/year
throughout the 8 year period, payable at the beginning of each year. Either way, there is no need to treat the wastes after 8 years. Use the annual worth method to determine
how the wastes should be processed. The company's MARR is 13%.
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 13% per year.
www
An integrated, combined cycle power plant produces 285 MW of electricity by gasifying coal. The capital investment for the plant is $570 million, spread evenly over two years. The operating life of the plant is expected to be 20 years. Additionally, the plant will operate at full capacity 75% of the time (downtime is 25% of any given year). The MARR is 6% per year. Solve, 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?
Chapter 5 Solutions
Engineering Economy (17th Edition)
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 - What is the capitalized worth of a project that...Ch. 5 - A large induced-draft fan is needed for an...
Ch. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - A corporate bond pays 5% of its face value once...Ch. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - The cash-flow diagram below has an internal rate...Ch. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Your firm is thinking about investing 200,000in...Ch. 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 - An asset has an initial capital investment of4...Ch. 5 - A simple, direct space heating system is currently...Ch. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Its easier to make money when interest rates in...Ch. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Stan Moneymaker has been informed of a major...Ch. 5 - The required investment cost of a new, large...Ch. 5 - Prob. 35PCh. 5 - A parking garage has a capital investment cost of...Ch. 5 - The city of Oak Ridge is considering the...Ch. 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 - The upturned wingtips on jet aircraft reduce drag...Ch. 5 - Prob. 56PCh. 5 - Prob. 57PCh. 5 - Prob. 58PCh. 5 - In southern California a photovoltaic (PV) system...Ch. 5 - a. Calculate the IRR for each of the three...Ch. 5 - Prob. 61PCh. 5 - A hospital germ-fighting and floor cleaning robot,...Ch. 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 - Prob. 84FECh. 5 - Prob. 85FE
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- A small company heats its building and spends $8,800 per year on natural gas for this purpose. Cost increases of natural gas are expected to be 9% per year starting one year from now (i.e., the first cash flow is $9,592 at EOY one). Their maintenance on the gas furnace is $355 per year, and this expense is expected to increase by 12% per year starting one year from now (i.e. the first cash flow for this expense is $397.60 at the EOY one). If the planning horizon is 14 years, what is the total annual equivalent expense for operating and maintaining the furnace? The interest rate is 15% per year. Click the icon to view the interest and annuity table for discrete compounding when /- 0% per year. Click the icon to view the interest and annuity table for discrete compounding when /-12% per year. Click the icon to view the interest and annuity table for discrete compounding when / 15% per year. CORD The total annual equivalent expense for operating and maintaining the fumace is $thousands…arrow_forwardThe CFO of a consulting engineering firm is deciding between purchasing Ford Explorers and Toyota 4Runners for company principals. The purchase price for the Ford Explorer will be $29,750. Annual maintenance costs for the Explorer are expected to be $525 per year more than that of the 4Runner. The purchase price for Toyota 4Runners is 35,000 The trade-in values after 3 years are estimated to be 50% of the first cost for the Explorer and 60% for the 4Runner. (a) What is the range incremental ROR (i.e. 11% -12%) between the two vehicles? (b) Provided the firm's MARR is 12% per year, which vehicle should it buy? O a. (a) 3% -4% (b) buy the Ford Explorer O b. (a) 14%-15% O c. (a) 16% -17% O d. (a) 15% -16% (b) buy the Toyota 4Runner (b) buy the Toyota 4Runner (b) buy the Ford Explorerarrow_forwardA building has a gymnasium with sixteen 500 Watt incandescent ceiling lights. An equivalent amount of light could be produced by sixteen 250 Watt PAR (parabolic aluminized reflector) ceiling lamps. The difference in price is $10.50 per lamp, with no difference in labor. The gymnasium is used 9 months each year. How many hours per week must the gymnasium be used in order to justify the cost difference of a 1-year payback? Assume that the following rate schedule is used, that gymnasium lights do contribute to the peak demand.Rate structure:(Minimum demand of 20 kW/month to qualify for rate)Energy cost = $0.04 per kWhDemand cost = $6.50 per kW per monthTaxes = Total of 8%arrow_forward
- A project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $56417, a maintenance costs that start at $5,000 at end of year (FOY) one and increase by $1,000 for esch of the next four years, and then remain constant for the following five years; savings of $24851 per year (EOY 1-10); and finally a resale value of $31935 at EOY 10 If the project has a 10 year life and the firm's MARR is 10% per yeat, what is the present worth of the project?.arrow_forwardThe Ford Motor Company has re-designed its best selling truck by substituting aluminum for steel in many key body parts. This saves 600 pounds of weight and decreases gas consumption. The fuel consumption will be 27 miles per gallon (mpg), up from 24 mpg of the previous year's model. Ford will increase the sticker price of the re-designed vehicle by $470. Assume this vehicle will be driven 16,000 miles per year and its life will be 9 years. The owner's MARR is 8% per year and gasoline costs $3.02 per gallon. What is the present worth of the incremental capital outlay for the lighter truck? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 8% per year. The present worth of the incremental capital outlay for the lighter truck is $ (Round to the nearest dollar.)arrow_forwardA small company heats its building and spends $8,000 per year on natural gas for this purpose. Cost increases of natural gas are expected to be 10% per year starting one year from now (i.e., the first cash flow is $8,800 at EOY one). Their maintenance on the gas furnace is $345 per year, and this expense is expected to increase by 15% per year starting one year from now (i.e., the first cash flow for this expense is $396.75 at the EOY one). If the planning horizon is 15 years, what is the total annual equivalent expense for operating and maintaining the furnace? The interest rate is 18% per year. Click the loon to view the interest and annuity table for discrete compounding when/= 10% per year. Click the icon to view the interest and annuity table for discrete compounding when /= 15% per year. Click the icon to view the interest and annuity table for discrete compounding when /= 18% per year. The total annual equivalent expense for operating and maintaining the furnace is $ thousands.…arrow_forward
- Your boss has asked you to evaluate the economic viability of refinancing a loan on your plant's process equipment. The original loan of $400,000 was for 7 years. The payments are monthly and the nominal interest rate on the current loan is 6% per year. As of the present time, your company has had the loan for 36 months. The new loan would be for the current balance (i.e. the balance at the end of the 36th month on the old loan) with monthly payments at a nominal interest rate of 3% per year for 4 years. A one-time financing fee for the new loan is $10,000. Your company's MARR is 9% per year on a nominal basis. Determine if the new loan is economically advantageous. The present worth of the difference between the original financing plan and the new (proposed) financing plan is $ (Round to the nearest dollar.)arrow_forward! Required information Eight years ago, Ohio Valley Trucking purchased a large- capacity dump truck for $102,000 to provide short-haul earth-moving services. The company sold it today for $45,000. Operating and maintenance costs averaged $10,200 per year. A complete overhaul at the end of year 4 costs an extra $3600. Calculate the annual cost of the truck at i = 8% per year. The annual cost of the truck is $- per year.arrow_forwardA large textile company is trying to decide among three alternatives of sludge dewatering processes. The costs associated with these alternatives are shown below. Alternative Y will need an upgrade of $9700 at the end of year 2. At the end of year 2, alternative Z would be replaced with another alternative Z having the same installed and operating costs. If the MARR is 12% per year, which alternative should be chosen? Alternative Y Installed costs S68500 S48500 $33500 Annual operating costs S6000 S4000 S5000 Overhaul cost in year 2 $9700 Salvage value (S) [your student ID/10) ID +10 ID- 10 ID- 10 Useful life, years 2.arrow_forward
- A diesel engine uses type A filter and high end lubricating oil costing $5.50 per liter. With this filter the oil and filter have to be change every 500 hours of operation, and 5 liters of oil have to be added every 100 hours. This filter costs $148 per piece. 80 liters of oil fill the engine. Another type, Filter B, costing $120 may be used with a lower grade of oil costing $4.80 per liter. However if this filter is used, the oil and the filter had to be change every 300 hrs and 10 liters are added after each 150 hrs the engine is used. Which type of filter would you recommend?arrow_forwardThe CFO of a consulting engineering firm is deciding between purchasing Ford Explorers and Toyota 4Runners for company principals. The purchase price for the Ford Explorer will be $30,750. Annual maintenance costs for the Explorer are expected to be $575 per year more than that of the 4Runner. The purchase price for Toyota 4Runners is 35,250 The trade-in values after 3 years are estimated to be 50% of the first cost for the Explorer and 60% for the 4Runner. (a) What is the incremental ROR between the two vehicles? (b) Provided the firm’s MARR is 15% per year, which vehicle should it buy?arrow_forwardA sheltered workshop requires a lift truck to handle pallets for a new contract. A lift truck can be purchased for Rs.2,70,000. Annual insurance costs are 3% of the purchase price, payable on the first of each year, an equivalent truck can be rented for Rs,15,000 per month payable at the end of each month. Operating costs are same for both the alternatives. For what minimum number of months must a purchased truck be used on the contract to make purchasing more attractive than leasing? Interest rate is 12% compounded monthly. Assume that the purchased truck has no salvage value. Solve using Formulas and draw cash flow diagram.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
Difference between Renewable and Nonrenewable Resources; Author: MooMooMath and Science;https://www.youtube.com/watch?v=PLBK1ux5b7U;License: Standard Youtube License