Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 19P
(a):
To determine
Calculate the present worth.
(b):
To determine
Calculate the incremental
(c):
To determine
Calculate the new present worth.
(d):
To determine
Calculate the payback period.
(e):
To determine
Selection of the project.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Alternative A and B are two mutually exclusive cost alternatives, and one of them must be
selected. Using Incremental Analysis, which of the alternatives should be recommended based on
ERR (the External Rate of Return)? ·
MARR (Minimum acceptable rate of return) is 12% per year while the re-investment rate is
10% per year.
The study period is 20 years. Assume repeatability is appropriate for this comparison.
Alternative
A
B
$ (101,000)
$ (6,000)
20 years
$ (6,000)
$ (18,500 )
10 years
Initial capital investment
Annual operating expenses
Useful life
Salvage value
None
None
An industrial coal-fired boiler for process steam is
equipped with a 10-year-old electrostatic precipitator
(ESP). Changes in coal quality have caused stack
emissions to be in noncompliance with federal
standards for particulates. Two mutually exclusive
alternatives have been proposed to rectify this problem
(doing nothing is not an option). The MARR is 9% per
year. Make a recommendation regarding which
alternative to select.
3. An industrial coal-fired boiler for process steam is equipped with a 10-year-old electrostatic
precipitator (ESP). Changes in coal quality have caused stack emissions to be in noncompliance
with federal standards for particulates. Two mutually exclusive alternatives have been proposed
to rectify this problem (doing nothing is not an option).
Capital investment
Annual operating expenses
Useful Life
New Baghouse
$1,140,000
$115,500
10 years
New ESP
$992,500
$73,200
10 years
The MARR is 9% per year. Make a recommendation regarding which alternative to select.
Capital Investment
Annual Revenues
Annual Expenses
MV at end of useful life
Useful Life
IRR
Alternative 1
$16,000
$7,000
$2,400
$1,600
4 years
9.1%
Alternative 2
$23,000
$13,000
$5,000
$600
12 years
33.7%
□
Chapter 6 Solutions
Engineering Economy
Ch. 6 - Prob. 1PCh. 6 - The Consolidated Oil Company must install...Ch. 6 - Prob. 3PCh. 6 - Three mutually exclusive design alternatives are...Ch. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Fiesta Foundry is considering a new furnace that...Ch. 6 - Prob. 8PCh. 6 - Prob. 9PCh. 6 - Consider the following cash flows for two mutually...
Ch. 6 - Prob. 11PCh. 6 - Prob. 12PCh. 6 - The alternatives for an engineering project to...Ch. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - Refer to the situation in Problem 6-16. Most...Ch. 6 - Prob. 18PCh. 6 - Prob. 19PCh. 6 - Prob. 20PCh. 6 - Prob. 21PCh. 6 - Prob. 22PCh. 6 - Prob. 23PCh. 6 - Prob. 24PCh. 6 - Prob. 25PCh. 6 - In the Rawhide Company (a leather products...Ch. 6 - Refer to Problem 6-2. Solve this problem using the...Ch. 6 - Prob. 28PCh. 6 - Prob. 29PCh. 6 - Prob. 30PCh. 6 - Prob. 31PCh. 6 - Prob. 32PCh. 6 - Prob. 33PCh. 6 - Potable water is in short supply in many...Ch. 6 - Prob. 35PCh. 6 - Prob. 36PCh. 6 - In the design of a special-use structure, two...Ch. 6 - Prob. 38PCh. 6 - a. Compare the probable part cost from Machine A...Ch. 6 - Prob. 40PCh. 6 - Two mutually exclusive alternatives are being...Ch. 6 - Prob. 42PCh. 6 - IBM is considering an environmentally conscious...Ch. 6 - Three mutually exclusive earth-moving pieces of...Ch. 6 - A piece of production equipment is to be replaced...Ch. 6 - Prob. 46PCh. 6 - Prob. 47PCh. 6 - Prob. 48PCh. 6 - Prob. 49PCh. 6 - Prob. 50PCh. 6 - Prob. 51PCh. 6 - Prob. 52PCh. 6 - Prob. 53PCh. 6 - Prob. 54PCh. 6 - Prob. 55PCh. 6 - Prob. 56PCh. 6 - Prob. 57PCh. 6 - Prob. 58PCh. 6 - Prob. 59PCh. 6 - Prob. 60PCh. 6 - Prob. 61PCh. 6 - Prob. 62PCh. 6 - Prob. 63PCh. 6 - Prob. 64PCh. 6 - Prob. 65PCh. 6 - Prob. 66PCh. 6 - Three models of baseball bats will be manufactured...Ch. 6 - Refer to Example 6-3. Re-evaluate the recommended...Ch. 6 - Prob. 69SECh. 6 - Prob. 70SECh. 6 - Prob. 71SECh. 6 - Prob. 72CSCh. 6 - Prob. 73CSCh. 6 - Prob. 74CSCh. 6 - Prob. 75FECh. 6 - Prob. 76FECh. 6 - Prob. 77FECh. 6 - Complete the following analysis of cost...Ch. 6 - Prob. 79FECh. 6 - For the following table, assume a MARR of 10% per...Ch. 6 - Prob. 81FECh. 6 - Problems 6-82 through 6-85. (6.4) Table P6-82 Data...Ch. 6 - Prob. 83FECh. 6 - Problems 6-82 through 6-85. (6.4) Table P6-82 Data...Ch. 6 - Problems 6-82 through 6-85. (6.4) Table P6-82 Data...Ch. 6 - Consider the mutually exclusive alternatives given...Ch. 6 - Prob. 87FE
Knowledge Booster
Similar questions
- Give proper answer without photo answer and take a likearrow_forwardAdvanced Modular Technology (AMT) makes energy cleaner, safer, more secure and more efficient. It typically exhibits net annual revenues that increase over a fairly long period. In the long run, an AMT project may be profitable as measured by IRR, but its simple payback period may be unacceptable. Evaluate this AMT project using the IRR method when the company MARR is 13% per year and its maximum allowable payback period is two years. What is your recommendation? $98,000 $2,000 + Capital investment at time 0 Net revenues in year k $10,000 • (k- 1) $9,000 Market (salvage) value Life 4 yearsarrow_forwardOne of the mutually exclusive alternatives below must be selected. Base your recommendation on A(Sauer-Glock) cash flows when the MARR=6% per year Q EOY a EOY P/5 ♡ 10 20 0 10 J 20 P 2P Glock 40 Sauer 45 The IRR on A(Sauer-Glock) is 13% (Round to two decimal places)arrow_forward
- Fairmont Industries primarily relies on 100% equity financing to fund projects. A goodopportunity is available that will require $250,000 in capital. The Fairmont owner can supply themoney from personal investments that currently earn an average of 8.5% per year. The annualnet cash flow from the project is estimated at $30,000 for the next 15 years. Alternatively, 60%of the required amount can be borrowed for 15 years at 9% per year. If the MARR is the WACC,determine which plan, if either is better. This is a before-tax analysisarrow_forwardSolve without using excel please.arrow_forwardhelp please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all workingarrow_forward
- The cost of a biomedical image scanning machine is 95000 with an estimated annual maintenance cost of $4500 and an overhauling cost of 3000 in year 6. The machine is projected to save $25000 in direct labor cost annually. Biomedical Analytics Inc. the company who purchased the machine plans to sell it 10 years from now at a price of $35000. a) Draw the cash flow diagram b) Determine the Rate of Return (ROR) if staring with two initial guesses of 18% and 20% Hints: Profit= R-TC Profit = rQ-(FC+ v Q = Annual Quantityarrow_forwardincremental rate of return analysis MARR = 20% %3| 1st 0=-8000 + 12.886,63(P/A,i*,15) + 533,33(P/Fi",15) I*= ? 2nd 0=-2800 + 864,87(P/A,i",15) + 186,67(P/F,i*,15) 1*= ? 3rd 0=-2960 + 1297,32(P/A,i*,15) + 197,33(P/F,i*,15) |*= ? wie 4th 0=-1040 + 2767,6(P/A,i*,15) + 69,33(P/E.i*,15) I*2 0=-2000 + 2508,13(P/A.i*,15)+ 133,34(P/E.i*,15) I*= ?arrow_forwardE4 An engineer at Delphi Systems is considering the projects below, all of which can be considered to last indefi nitely. The company’s MARR is 13% per year. (a) Determine which projects should be selected on the basis of IROR if the budget limitation is $39,000. (b) What is the overall rate of return if the money not invested in projects is assumed to earn a rate of return equal to the MARR?arrow_forward
- The cost of maintaining a certain permanent monument in Washington DC occurs as periodic outlays of $1,000 every year and $5,000 every 3 years Calculate the capitalized cost of the maintenance using an interest rate of 10% per year. (Reminder: Capitalized Cost is the present equivalent value of an infinite pavment series. Use factors or formulasarrow_forwardAn aerodynamic three-wheeled automobile (the Dart) runs on compressed natural gas stored in two cylinders in the rear of the vehicle. The $13,000 Dart can cruise at speeds up to 85 miles per hour, and it can travel 90 miles per gallon of fuel. Another two-seater automobile costs $12,000 and averages 50 miles per gallon of compressed natural gas. If fuel costs $8.00 per gallon and MARR is 10% per year, over what range of annual miles driven is the Dart more economical? Assume a useful life of six years for both cars. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. ... Dart is more economical if you are planning on driving more per year. (Round to the nearest whole number.) miles orarrow_forwardWhat is the IRR percentagearrow_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