Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 45P
To determine
Calculate the incremental
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A company is considering installing solar panels on
a roof. The initial installation will cost $30,000, but
it will save $260 in electricity each month and last
20 years. If MARR = 0.5%, what is the discounted
payback period of the solar panels?
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)
A new municipal refuse-collection truck can be purchased for $84,000. Its expected useful life is six years, at which time its market value will be zero. Annual receipts less expenses will be approximately $25,000 per year over the six-year study period. If MARR of 18% determine whether this is a good investment.
a) Use the PW method. PW = $
b) The ERR of this project is %
c) Determine the Simple Payback Period. years
Chapter 7 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10P
Ch. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - Consider an investment project with the cash flows...Ch. 7 - Consider the investment projects given in Table...Ch. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Consider the investment projects given in Table...Ch. 7 - Consider the investment projects given in Table...Ch. 7 - Prob. 21PCh. 7 - Prob. 22PCh. 7 - Consider the investment projects given in Table...Ch. 7 - Prob. 24PCh. 7 - Prob. 25PCh. 7 - Prob. 26PCh. 7 - Prob. 27PCh. 7 - Prob. 28PCh. 7 - Prob. 29PCh. 7 - Prob. 30PCh. 7 - Prob. 31PCh. 7 - Prob. 32PCh. 7 - Prob. 33PCh. 7 - Prob. 34PCh. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Prob. 39PCh. 7 - Prob. 40PCh. 7 - Prob. 41PCh. 7 - Prob. 42PCh. 7 - Consider the two mutually exclusive investment...Ch. 7 - You are considering two types of automobiles....Ch. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - Fulton National Hospital is reviewing ways of...Ch. 7 - Prob. 48PCh. 7 - Consider the investment projects given in Table...Ch. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Prob. 53PCh. 7 - Prob. 54PCh. 7 - Prob. 55PCh. 7 - Prob. 56PCh. 7 - Prob. 57PCh. 7 - Prob. 1STCh. 7 - Prob. 2STCh. 7 - Prob. 3STCh. 7 - Prob. 4STCh. 7 - Prob. 5ST
Knowledge Booster
Similar questions
- MARR = 8%. Your consultancy business signs on with a new client. The client pays you $5000 up front as deposit toward future work. One year later the client makes another payment of $5000. The year after that you invest $16,000 into the project. The following year, in the third year, the client pays you the remaining balance of $5388. The project's precise ERR is within 0.5% of a) 12% b) 13% c) 4% d) 15% e) None of the abovearrow_forwardProjects 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_forwardQuestion 4 Consider a proposal to enhance production of tortillas en a taqueria. The new machine is estimated to cost $30 million and will incur an additional $1 million per year in maintenance costs. The machine will produce annual savings of $6 million each year. The Minimum acceptable rate of return (MARR) is 11% per year, and the study period is five years at which time the machine will be obsolete (worthless). What is the maximum (minimum) value of maintenance cost that reverse your decision? Write 4 decimalsarrow_forward
- The cost of an item is P200,000. Cost is P20,000 per year. What would be the capitalised cost of a permanent service using 10%?arrow_forwardAn airline is considering two types of engine systems for use in its planes. Each has the same life and the same maintenance and repair record. System A costs 5 million and uses 48,000 liters per 1,000 hours of operation at the average load encountered in passenger service. System B costs 10 million and uses 38,400 liters per 1,000 hours of operation at the same level. Both engine systems have 3-year lives before any major overhaul. Based on the initial investment, the systems have 10% salvage values. If jet fuel costs 108 a liter, and fuel consumption is expected to increase at the rate of 6% each year due to degrading engine efficiency, which engine system should the firm install? Assume 2,000 hours of operation per year, and a MARR of 10%.arrow_forwardPlease provide steps by step answer with proper calculation with final answer......arrow_forward
- An integrated, combined cycle power plant produces 285 MW of electricity by gasifying coal. The capital investment for the plant is $530 million, spread evenly over two years. The operating life of the plant is expected to be 18 years. Additionally, the plant will operate at full capacity 76% of the time (downtime is 24% of any given year). The MARR is 7% per year. a. If this plant will make a profit of two cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low-risk venture? b. What is the IRR for the plant? Is it profitable? a. The simple payback period of the plant is 14 years. (Round up to one decimal place.) It's a high-risk venture. b. The IRR for the plant is %. (Round to one decimal place.) CHEarrow_forwardJ&M Corporation purchased a vibratory finishing machine for $20,000 in year 0. The useful life of the machine is 10 years, at the end of which, the machine is estimated to have a zero salvage value. The machine generates net annual revenues of $6,000. The annual operating and maintenance expenses are estimated to be $1,000. If J&M’s MARR is 15% per year compounded monthly, how many years does it take before this machine becomes profitable?arrow_forwardToday, you have $35,000 to invest. Two investment alternatives are available to you. One would require you to invest your $35,000 now; the other would require the $35,000 investment two years from now. In either case, the investments will end five years from now. The cash flows for each alternative are provided below. Using a MARR of 13%, what should you do with the $35,000 you have? Click the icon to view the alternatives description. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 13% per year. The FW of the Alternative 1 is $ (Round to the nearest dollar.) More Info Year OT N345 0 1 2 Alternative 1 - $35,000 $15,000 $15,000 $15,000 $13,000 $13,000 Alternative 2 $0 $0 - $35,000 $16,500 $16,500 $16,500 0 Xarrow_forward
- An integrated, combined cycle power plant produces 285 MW of electricity by gasifying coal. The capital investment for the plant is $450 million, spread evenly over two years. The operating life of the plant is expected to be 18 years. Additionally, the plant will operate at full capacity 76% of the time (downtime is 24% of any given year). The MARR is 10% per year. a. If this plant will make a profit of two cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low-risk venture? b. What is the IRR for the plant? Is it profitable? a. The simple payback period of the plant is years. (Round up to one decimal place.) It's a venture. b. The IRR for the plant is%. (Round to one decimal place.) The plant isarrow_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_forwardA computerized wood lathe, costing P25,000, will be used to make ornamental parts for sale. Receipts are estimated at P60,000 per year with costs running P55,000 per year. The salvage value is P9,000 at the end of 10 years. If the MARR is 12%, what is the present worth of this investment? a) P 7,877.89 b) P 6,148.87 c) P 50,353.36 d) P 56,148.87arrow_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