Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 8P
To determine
Calculate the present worth.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
K
Larson Manufacturing is considering purchasing a new injection-molding machine for $280,000 to expand its
production capacity. It will cost an additional $15,000 to do the site preparation. With the new injection-molding
machine installed, Larson Manufacturing expects to increase its revenue by $94,000 per year. The machine will be
used for six years, with an expected salvage value of $77,000. At an interest rate of 8%, would the purchase of
the injection-molding machine be justified?
Click the icon to view the interest factors for discrete compounding when / -8% per year.
The present worth of the project is $
CHID
(Round to the nearest dollar)
You are considering buying a company for $699, 000. If you expect the
business to earn $97,000 per year, how long is the discounted payback
period if your MARR is 5% ? (in years)
Select the correct answer:
4) Compute the equivalent annual worth of an investment
alternative that has an annuity of $2,000 for six (6) years and
increase every year $200 from year two (2) to year seven (7)
with an interest rate of 8%.
$2,455.26
$2,369.30
$538.74
$2,538.74
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
Knowledge Booster
Similar questions
- Larson Manufacturing is considering purchasing a new injection-molding machine for $370,000 to expand its production capacity. It will cost an additional $15,000 to do the site preparation. With the new injection-molding machine installed, Larson Manufacturing expects to increase its revenue by $83,000 per year. The machine will be used for six years, with an expected salvage value of $60,000. At an interest rate of 12%, would the purchase of the injection-molding machine be justified? Equal Payment Series Single Payment Compound Amount Present Compound Amount Factor Sinking Fund Factor Worth Capital Recovery Factor (A/P, i, N) Factor Factor (F/P, i, N) (F/A, i, N) (A/F, i, N) (P/A, i, N) 1.1200 1.0000 1.0000 0.8929 1.1200 1.2544 2.1200 0.4717 1.6901 0.5917 1.4049 3.3744 0.2963 2.4018 0.4163 1.5735 4.7793 0.2092 3.0373 0.3292 1.7623 6.3528 0.1574 3.6048 0.2774 1.9738 8.1152 0.1232 4.1114 0.2432 2.2107 10.0890 0.0991 4.5638 0.2191 2.4760 12.2997 0.0813 4.9676 0.2013 2.7731 14.7757…arrow_forwardA new computer network system is being considered for an organization. The initial cost of the system is $375,000. Annual maintenance and operating costs would be $22,000 per year. The organization has a desired rate of interest of 10% for its projects. The expected annual income from the computer network are expected to be $97,000. Determine the present worth if they are going to use it for four (4) years. PW = -$13,925 PW-$13,726 PW = $11,725 PW = $15,725.arrow_forwardPlease manually solve this problems. THank youarrow_forward
- You are considering buying a rental property sells for $405000.0. If the annual rental income is $44394.1. What is the required rate of return in percentage on this asset?arrow_forwardThe present price (year 0) of kerosene is $4.30 per gallon, and its cost is expected to increase by 10% per year. (At the end of year 1, kerosene will cost $4.73 per gallon.) Mr. Garcia uses about 800 gallons of kerosene for space heating during a winter season. He has an opportunity to buy a storage tank for $600, and at the end of four years, he can sell the storage tank for $100. The tank has a capacity to supply four years of Mr. Garcia's heating needs. So, he can buy four years' worth of kerosene at its present price ($4.30), or he can invest his money elsewhere at 6% interest. Should he purchase the storage tank? Assume that kerosene purchased on a pay-as-you-go basis is paid for at the end of the year. (However, kerosene purchased for the storage tank is purchased now.)arrow_forwardThe manager of Automated Products is contemplating the purchase of a new machine that will cost$300,000 and has a useful life of five years. The machine will yield (year-end) cost reductions toAutomated Products of $50,000 in year 1, $60,000 in year 2, $75,000 in year 3, and $90,000 in years4 and 5. What is the present value of the cost savings of the machine if the interest rate is 8 percent?arrow_forward
- You just purchased a pin-inserting machine to relieve some bottleneck problems that have been created in manufacturing a PC board. The machine cost $53,000 and has an estimated service life of six years. At that time, the estimated salvage value would be $5,700. The machine is expected to operate 3,200 hours per year. The expected annual operating and maintenance cost would be $6,400. If your firm's interest rate is 11%, what would be the machine cost (owning and operating) per hour? Click the icon to view the interest factors for discrete compounding when /= 11% per year. The machine cost per hour would be $. (Round to the nearest cent.)arrow_forwardXespresso is launching a new type of espresso coffee machine. Production requires an initial investment of £85m in year zero. The project is expected to last 5 years, after which the new machine is expected to become obsolete and production will be discontinued. £10m are expected to be recovered in year 5 by selling production facilities. Sales of the new machine are expected to be worth £30m in each of years 1-5. Operating costs will be £10m per year in each of years 1-5. The company is expecting to accumulate an inventory equal to 10% of sales in year 1, which will be maintained throughout years 1-4 and then sold in year 5. Assume for simplicity that there are no taxes and all cash flows (including working capital investments) occur at the end of the year. a. Determine the project's NPV using a 10% discount factor. Should the company undertake this project? b. Assume that the company has a beta equal to 2 and a debt to equity ratio equal to one. The risk free rate is 4% and the…arrow_forwardYou invested $100,000 in a project and received $40,000 at n = 1, $40,000 at n = 2, and $30,000 at n = 3 years. For some reasons, you need to terminate the project at the end of year 3. Your interest rate is 10%, what is the project balance at the time of termination?arrow_forward
- A company is considering investing $17,500 in a heat exchanger. The heat exchanger will last five years, at which time it will be sold for $2,000. The maintenance cost at the end of the first year is estimated to be $1,500. Maintenance costs for the exchanger are estimated to increase by $1,000 per year over its life. As an alternative, the company may lease the equipment for $X per year, including maintenance, with the annual payments to made at the end of each year. a. Choose cash flow diagrams of both alternatives. b. For what value of X should the company lease the heat exchanger? The company expects to earn 8% on its investments. Assume end-of-year lease payments. Click the icon to view the interest and annuity table for discrete compounding when i= 8% per year. $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $2,500 $3,500 $4,500 $5,500 $17,500 $17,500arrow_forwardAn oil and gas exploration firm invested $2,400,000 in drilling for natural gas in a new gas field. The firm's geologist believes the field has the potential to produce gas for 25 years. The revenue resulting from the gas well the first year after drilling is $740,000; based on previous experiences with similar types of wells, it is expected the annual revenue will decrease at an annual rate of 1%. Likewise, the costs of operating the well the first year totals $160,000; costs are expected to increase at an annual rate of 3%. Based on a 25-year planning horizon and a MARR of 20%, what is the firm's external rate of return for the investment? Click here to access the TVM Factor Table calculator. %arrow_forwardAn expenditure of $20,000 is made to modify a material-handling system in a small job shop. This modification will result in first-year savings of $2,000, a second-year savings of $4,000, and a savings of $5,000 per year thereafter. How many years must the system last if an 18% return on investment is required? The system is tailor made for this job shop and has no market (salvage) value at any time.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