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 6, Problem 17P
To determine

Calculate the rate of return.

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Since many U.S. Navy aircraft are at or near their usual retirement age of 30 years, military officials want a precise system to assess when aircraft should be taken out of service. A computational method developed at Carnegie Mellon maps in 3-D the microstructure of aircraft materials in their present state so that engineers can test them under different conditions of moisture, salt, dirt, etc. Military officials can then determine if an aircraft is fine, is in need of overhaul, or should be retired. If the 3-D system allows the Navy to use one airplane 2 years longer than it normally would have been used, thereby delaying the purchase of a $20 million aircraft for 2 years, what is the present worth of the assessment system at an interest rate of 8% per year?
Lennon Hearth Products manufactures glass-door fireplace screens that have two types of mounting brackets for the frame. An L-shaped bracket is used for relatively small fireplace openings and a Ushaped bracket is used for all others. The company includes both types of brackets in the box with their product and the purchaser discards the one not needed. The cost of these two brackets with screws and other parts is $3.50. If the frame of the fireplace screen is redesigned, a single universal bracket can be used that will cost $1.20 to make. However, initial costs of retooling ($6000) and inventory writedowns ($8000) will be incurred immediately. If the company sells 1200 fireplace units per year, should the company keep the old brackets or go with the new ones, assuming the company uses an interest rate of 15% per year and it wants to recover its investment in 5 years. Use the present worth method for your evaluation.
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.)

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Basics Of Engineering Economy

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