ENGINEERING ECONOMIC ENHANCED EBOOK
14th Edition
ISBN: 9780190931940
Author: NEWNAN
Publisher: OXF
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Chapter 7, Problem 78P
To determine
The alternatives for the investment opportunity which will be best to be selected between both of them.
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If the company's MARR is known to be 10%, is the investment justified?
A city is spending $20.1 million on a new sewage system. The expected life of the system is 50 years, and it will have no market value at the end of its life. Operating and maintenance expenses for the system are projected to average $0.5 million per year. If the city's MARR is 6% per year,
what is the capitalized worth of the system? The study period is 100 years.
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 6% per year.
The capitalized worth of the system is $
million. (Round to two decimal places.)
The required investment cost of a new, large shopping center is $50 million. The salvage value of the project is estimated to be $22 million (the value of the land). Theproject's life is 17 years and the annual operating expenses are estimated to be $18 million. The MARR for such projects is 15% per year. What must the minimum annual revenue be to make the shopping center a worth whileventure?
Chapter 7 Solutions
ENGINEERING ECONOMIC ENHANCED EBOOK
Ch. 7 - Prob. 1QTCCh. 7 - Prob. 2QTCCh. 7 - Prob. 3QTCCh. 7 - Prob. 4QTCCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6P
Ch. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10PCh. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - Prob. 15PCh. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Prob. 19PCh. 7 - Prob. 20PCh. 7 - Prob. 21PCh. 7 - Prob. 22PCh. 7 - Prob. 23PCh. 7 - Prob. 24PCh. 7 - Prob. 25PCh. 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 - Prob. 43PCh. 7 - Prob. 44PCh. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - Prob. 47PCh. 7 - Prob. 49PCh. 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. 58PCh. 7 - Prob. 59PCh. 7 - Prob. 60PCh. 7 - Prob. 61PCh. 7 - Prob. 62PCh. 7 - Prob. 63PCh. 7 - Prob. 64PCh. 7 - Prob. 65PCh. 7 - Prob. 66PCh. 7 - Prob. 67PCh. 7 - Prob. 68PCh. 7 - Prob. 69PCh. 7 - Prob. 70PCh. 7 - Prob. 71PCh. 7 - Prob. 72PCh. 7 - Prob. 73PCh. 7 - Prob. 74PCh. 7 - Prob. 75PCh. 7 - Prob. 76PCh. 7 - Prob. 77PCh. 7 - Prob. 78PCh. 7 - Prob. 79PCh. 7 - Prob. 80PCh. 7 - Prob. 81PCh. 7 - Prob. 82PCh. 7 - Prob. 83PCh. 7 - Prob. 84PCh. 7 - Prob. 85PCh. 7 - Prob. 87PCh. 7 - Prob. 88PCh. 7 - Prob. 89P
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- How would I solve part A and B ? Thank you..arrow_forwardA design change being considered by Mayberry, Inc., will cost $6,000 and will result in an annual savings of $1,000 per year for the 6-year life of the project. A cost of $2,000 will be avoided at the end of the project as a result of the change. MARR is 8%/yr. Solve, a. What is the internal rate of return of this investment? b. What is the decision rule for judging the attractiveness of investments based on internal rate of return? c. Should Mayberry implement the design change?arrow_forwardAn investor with a MARR of 15% and at least $40k to invest is using rate of return analysis to determine which, if either, of two mutually exclusive investment alternatives (X and Y) should be selected. Perform the analysis and make a recommendation. Alternative Initial cost (Sk) ROR (%) Life (years) Assume that the ROR of the incremental NCF (X - Y) is 10%. X Y 40 30 22 26 8 Choose do-nothing Choose Y because the ROR of Y is greater than the ROR of X Choose Y because the incremental ROR 0arrow_forward
- Carlisle Company has been cited and must invest in equipment to reduce stack emissions or face EPA fines of $20,500 per year. An emission reduction filter will cost $75,000 and have an expected life of 5 years. Carlisle's MARR is 10%/year. Part a What is the future worth of this investment? $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is £10.arrow_forwardHospital is evaluating the purchase of new office equipment from three vendors. Assume MARR=15% and 4 year useful life on all equipment. Select best vendor. What is the best vendor?arrow_forwardDon't answer by pen paper and don't use Excelarrow_forward
- Any help would be appreciated! Given the data for three different alternatives in the table below, determine the best alternative using the incremental rate of return (∆RoR) analysis. MARR =9%. A B C First cost $15,000 $25,000 $20,000 O &M Cost/ year 1,600 400 900 Benefit/year 8,000 13,000 9,000 Salvage value 3,000 6,000 4,600 Life in years 4 4 4 1. The better alternative between the first increment is ________________. A. Alt. A or Alt. B B. Alt. A C. Alt.C D. Alt. B 2. The better alternative between the second increment is ___________________. A. Alt. B or Alt. C B. Alt. B C. Alt. C D. Alt. Aarrow_forwardYou are planning to purchase equipment that costs Rs. 30,000 and is expected to last 12 years with a Rs. 3,000 salvage value. The annual operating expenses are expected to be Rs. 9,000 for the first 4 years but owing to decreased use, the operating costs will decrease by Rs. 400 per year for the next 8 years. MARR is 20%. Approximately what will the present worth of this investment be? Select the value closest to your answer a) Rs. 61,000 b) Rs. 67,000 c) Rs. 72,000 d) Rs. 75,000arrow_forwardThree independent alternatives are given below. If MARR is 18%, what is your decision? A B C Initial Cost $4.50 $1.90 $1.20 Annual Revenues $4.00 $2.50 $3.00 Salvage Value $0.50 $0.90 $0.00 Annual Operating & Maintenance Costs $1.20 $1.90 $2.70 Estimated life, in years 3 Infinitearrow_forward
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