Basics Of Engineering Economy
Basics Of Engineering Economy
2nd Edition
ISBN: 9780073376356
Author: Leland Blank, Anthony Tarquin
Publisher: MCGRAW-HILL HIGHER EDUCATION
Question
Book Icon
Chapter 6, Problem 18P

(a)

To determine

Calculate the rate of return.

(b)

To determine

Calculate the rate of return.

Blurred answer
Students have asked these similar questions
Insulated concrete forms (ICF) can be used as a substitute for traditional wood framing in building construction. Heating and cooling bills will be about 50% less than in a similar wood-frame home in Vermont. An ICF home will be approximately 10% more expensive to construct than a wood-frame home. A typical 2,000 square-foot home costs $120 per square foot to build with wood framing in Vermont and costs $200 per month (on average) to heat or cool.What is the IRR on the incremental investment in an equivalent-sized ICF home? The home’s residual value with both framing methods in 20 years is expected to be $280,000.
Shin likes to spend a (relatively small) portion of his income on vacations to Cabo San Lucas (a popular resort area in Mexico). On these trips, he either stays at a four-star resort with panoramic ocean views or a more modest, and slightly deteriorating hotel in the noisy part of town. Understandably, the four-star hotel is significantly more expensive. Suppose that the four-star hotel costs $5000/trip while the hotel costs just $500/trip. In recent years, the price of airfare has risen significantly, a change that affects the cost of his trips the same regardless of where he stays. Suppose that airfare has increased from $300/trip to $1000/trip. Why is it that following the higher travel prices, Shin is likely to spend more of his vacations at the four-star resort when he travels? (Assume that the hotel rates and Shin's preferences are fixed).
Q4. Steel cable barriers in highway medians are a low cost way to improve traffic safety without overstressing department of transportation budgets. Cable barriers cost $44,000 per mile, compared with $72,000 per mile for guardrail and $419,000 per mile for concrete barriers. Furthermore, cable barriers tend to snag tractor-trailer rigs, keeping them from ricocheting back into same-direction traffic. The state of Ohio spent $4.97 million installing 113 miles of cable barriers. Answer the following using both tabulated factors and a spreadsheet function. (a) If the cable barriers prevent accidents totaling $1.3 million per year, what rate of return does this represent over a 10-year study period? (b) What is the rate of return for 113 miles of guardrail if accident prevention is $1.1 million per year over a 10-year study period?

Chapter 6 Solutions

Basics Of Engineering Economy

Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Text book image
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Text book image
EBK HEALTH ECONOMICS AND POLICY
Economics
ISBN:9781337668279
Author:Henderson
Publisher:YUZU