Engineering Economy, Student Value Edition (17th Edition)
17th Edition
ISBN: 9780134838137
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 6, Problem 46P
To determine
Calculate the annual worth.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
The city council has approved the building of a new bridge over Running Water Creek. The bridge will cost $17,000 for initial construction and have an annual maintenance cost of $1,000. The council plans to withdraw money from the city’s Bridges and Highways account to open a special account to cover the initial construction and to fund a perpetuity to cover the maintenance costs forever. How much money must be withdrawn from the Bridges and Highways account if the city can expect to earn 5% on the special account? a. $1,000 b. $17,000 c. $18,000 d. $37,000.
An aircraft hangar requires a new high-efficiency HVAC system for environmental control and reducing
heating and cooling expenses. The cost of the HVAC system is $5.0 million, and the annual savings are
expected to be $400,000. The useful life of the HVAC system is 20 years, and its residual value is zero.
a) What is the simple payback period?
b) What is the internal rate of return? (Note: You can use the tables in the book or Excel to find the
IRR, but in either case show work and/or cut & paste a spreadsheet. If using the tables an
approximate answer will be acceptable)
Capital Investment Decision:Accounting Rate-of-Return Method Boink Corporation manufactures metal hard hats for on-site construction workers. Recently, management has tried to raise productivity to meet the growing demand from the real estate industry. The company is now thinking about buying a new stamping machine. Management has decided that only capital investments that yield at least a 14 percent return will be accepted. The new machine would cost $325,000; revenue would increase by $98,400 per year; the residual value of the new machine would be $32,500; and operating cost increases (including depreciation) would be $74,600.Using the accounting rate-of-return method, decide whether the company should invest in the machine. Show all computations to support your decision.
Chapter 6 Solutions
Engineering Economy, Student Value Edition (17th Edition)
Ch. 6 - An oil refinery finds that it is necessary to...Ch. 6 - The Consolidated Oil Company must install...Ch. 6 - One of the mutually exclusive alternatives below...Ch. 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 - DuPont claims that its synthetic composites will...Ch. 6 - Prob. 10P
Ch. 6 - Which alternative in the table below should be...Ch. 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 - An old, heavily used warehouse currently has an...Ch. 6 - Prob. 19PCh. 6 - Two electric motors (A and B) are being considered...Ch. 6 - Two mutually exclusive design alternatives are...Ch. 6 - Pamela recently moved to Celebration, Florida, an...Ch. 6 - Environmentally conscious companies are looking...Ch. 6 - Prob. 24PCh. 6 - Two 100 horsepower motors are being considered for...Ch. 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 - Two electric motors are being considered to drive...Ch. 6 - Prob. 31PCh. 6 - Prob. 32PCh. 6 - Prob. 33PCh. 6 - Potable water is in short supply in many...Ch. 6 - Three mutually exclusive investment alternatives...Ch. 6 - Prob. 36PCh. 6 - A companys MARR is 10% per year. Two mutually...Ch. 6 - Prob. 38PCh. 6 - a. Compare the probable part cost from Machine A...Ch. 6 - A one-mile section of a roadway in Florida has...Ch. 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 - Use the imputed market value technique to...Ch. 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
- Suppose Omni Consumer Products's CFO is evaluating a project with the following cash inflows. She does not know the project's initial cost; however, she does know that the project's regular payback period is 2.5 years. Year Cash Flow Year 1 $350,000 Year 2 $400,000 Year 3 $475,000 Year 4 $475,00 If the project's weighted average cost of capital (WACC) is 9%, what is its NPV? $373,562 $336,206 $317,528 $429,596arrow_forwardAn airline is planning to make iPads® available on some of its Boeing 747 aircrafts with in-flight e-mail and Internet service on transoceanic flights. Passengers on these flights will be able to rent iPads from the airline and use them to browse webs or to send and receive e-mail no matter where they arein the skies. A nominal charge of approximately $30 will be instituted for each rental. The airline has estimated the projected cash flows (in millions of dollars) for the systems in the first 10 aircraft as follows: Determine whether this project can be justified at MARR = 15%, and calculate the annual benefit (or loss) that would be generated after installation of the systems.arrow_forwardA new baseball stadium is being considered to be built in a metropolitan area by High Tech, Inc., at a cost of $50M. It is estimated that the annual maintenance cost will be $100K. The construction company recommends a major renovation every 50 years at a cost of $10M. If the corporation wants to set up a trust fund to pay for the stadium, its maintenance, and periodic renovations for an undefined number of years to come, what amount should be invested in the trust fund if the fun earns an annual interest rate of 6%? Group of answer choices $52,223,000 $60,566,667 $60,666,667 $73,500,429 $58,600,000arrow_forward
- Projects A and B are mutually exclusive. The minimum attractive rate of return (MARR) is 12%. Using rate of return analysis, which project should be selected? If the image fails to load here, go to https://www.dropbox.com/s/ld6wctqieu8jgwp/ROR.jpg >> Year 0 A B - $750 - $1,150 B-A - $400 123 $200 $300 $100 $200 $350 $150 $200 $400 $200 4 $600 $700 $100 ROR 17.68% 16.44% 13.69% Project A Project B Both Project A and B Select none of the project. Insufficient information to make a decision.arrow_forwardYour firm is thinking about investing $300,000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $33,000 in year one and then increasing by $11,000 more each year thereafter. Relevant expenses will be $20,000 in year one and will increase by $10,000 per year until the end of the cell's seven-year life. Salvage recovery at the end of year seven is estimated to be $11,000. What is the annual equivalent worth of the manufacturing cell if the MARR is 8% per year? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 8% per year. The annual equivalent worth of the manufacturing cell is $. (Round to the nearest dollar.)arrow_forwardAn energy management system that can save $8,040 per year for four (4) years, expenses are $2,000 per year, can be installed at a cost of $20,000. At the end of four (4) it is expected to be sold for $1,250. Using the end of year convention, the rate of return on this planned investment is most nearly: 1.ROR = 9.81% 2. ROR = 10% 03. ROR = 9.5% 04.ROR = 6%arrow_forward
- Write it on a paper with clear solutions. Thanksarrow_forwardProblem 06.027 AW of a Permanent Investment How much must you deposit each year into your retirement account starting now and continuing through year 10 if you want to be able to withdraw $75,000 per year forever, beginning 30 years from now? Assume the account earns interest at 10% per year. The amount to be deposited is determined to be $arrow_forwardNet present value (NPV) of the project =Single payoff x PVIAF (10.20%, 9 years) - initial outlay = $6,947 x 0.42340 - $2,182 = $759.39 What's the equation for the bolded item?arrow_forward
- Combined-cycle power plants use two combustion turbines to produceelectricity. Heat from the first turbine’s exhaust is captured to heatwater and produce steam sent to a second steam turbine thatgenerates additional electricity. A 968-megawatt combined-cycle gasfired plant can be purchased for P450 million, has no salvage value,and produces a net cash flow (revenues less expenses) of P50 millionper year over its expected 30-year life.a. If the hurdle rate (MARR) is 14% per year, how profitable aninvestment is this power plant?b. What is the simple payback period for the plant? Is this investmentacceptable?arrow_forwardYour firm is thinking about investing $200,000 in the overhaul of a manufacturing cell in a lean environment. Revenues are expected to be $36,000 in year one and then increasing by $12,000 more each year thereafter. Relevant expenses will be $5,000 in year one and will increase by $2,500 per year until the end of the cell's five-year life. Salvage recovery at the end of year five is estimated to be $8,000. What is the annual equivalent worth of the manufacturing cell if the MARR is 12% per year?arrow_forwardThe following cash flows result from a potential construction project for your company: Receipts of $545,000 at the start of the contract and $1,200,000 at the end of the fourth year Expenditures at the end of the first year of $400,000 and at the end of the second year of $900,000 A net cash flow of $0 at the end of the third year. Using an appropriate rate of return method (Approximate ERR), for a MARR of 20%, should your company accept this project (Perform all calculations using 5 significant figures and round your answer to one decimal place. ) What is the approximate ERR for this project? % Should your company undertake this project?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:PEARSONEngineering 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 LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial 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