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 33P
To determine

Calculate the incremental rate of return.

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An engineer has recently purchased a new piece of equipment to use in analyzing geological formations.  The equipment has no maintenance costs the first year due to a one year's free maintenance warranty.  In the second year, it is expected to cost $20 to maintain the equipment and in subsequent years the cost of maintenance will increase by $20 per year (i.e. maintenance cost is $40 in year three, $60 in year four, and so on). Approximately what amount must be set aside now at 7% interest to pay the cost of maintaining the equipment over the first six years of ownership?
The Sundance Detective Agency has purchased new surveillance equipment with the following estimates. The year index is k= 1, 2, 3, ... First cost = $1200 Annual maintenance cost = $75 + 5k Extra annual revenue = $250 + 50k Salvage value = $750 for all years Calculate the payback period to make a return of 10% per year. The payback period to make a return of 10% per year is years.
Maintenance costs for a new system are estimated to be $250,000 in year 3 and $175,000/year in years 4 to 10 of an expected 10-year life system. If similar systems will replace the current one, determine the equivalent annual maintenance cost at i = 8% per year.

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Basics Of Engineering Economy

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