Basics Of Engineering Economy
2nd Edition
ISBN: 9780073376356
Author: Leland Blank, Anthony Tarquin
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Students have asked these similar questions
What evaluation criterion is used in economic analysis?
(b)
SGBP Plantation Sdn Bhd plans to buy a new palm oil truck. There are THREE (3)
alternative brands to be evaluated in terms of cost estimation as shown in Table 1.
Given the MARR is 10% per annum. Noted that L3D represents the Last Three Digit
of student matric number.
(i)
(ii)
Capital Investment
(RM)
Annual maintenance
(RM)
Useful life (years)
Market Value (RM)
(Disposal Cost)
Table Q1(b): Palm oil truck
TITAN
58,000 +
(100 x L3D)
3,000
5
30,000
CIMC
61,000 +
(100 x L3D)
2,000
Draw cash-flow diagram for each truck.
10
(iii) Justify which brand should be selected.
15,000
ALIB
67,000 +
(100 x L3D)
1,000
10
17,000
Apply the private project evaluation method to compare the annual worth
(AW) for each truck.
There are a number of reasons for not paving a rural road, including low traffic volume, property owners who do not want it paved, speed control, and political issues. On the other hand, paved roads have lower road-user operating costs and are less costly to maintain. In Washington County, a report prepared by the county engineer showed that the construction cost for a stabilized gravel road that will last 3 years is $1,025,000, with a maintenance cost of $355,000 per year. A bituminous road will cost $3,525,000, but it will last for 10 years. Use i = 8% per year. (a) At what maintenance cost per year (for the bituminous road) will the equivalent annual costs of the two roads be the same? (b) If the road is not paved and the annual maintenance cost of the stabilized gravel surface is actually 30% per year higher than estimated, how many years must this surface last for the two to break even, assuming the paved road maintenance would be the breakeven value determined above? Answer these…
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- Please correct answer and don't use hand ratingarrow_forwardTwo automatic systems for dispensing maps are being compared by the state highway department. The accompanying breakeven chart of the comparison of these systems (System I vs. System II) shows total yearly costs for the number of maps dispensed per year for both alternatives. Answer the following questions. (a) What is the fixed cost for System I? (b) What is the fixed cost for System II? (c) What is the variable cost per map dispensed for System I? (d) What is the variable cost per map dispensed for System II? (e) What is the breakeven point in terms of maps dispensed at which the two systems have equal annual costs? (f) For what range of annual number of maps dispensed is System I recommended? (g) For what range of annual number of maps dispensed is System II recommended? (h) At 3000 maps per year, what are the marginal and average map costs for each system?arrow_forwardFEMA (Federal Emergency Management Agency) has ordered 25 specialized test units capable of field checking 15 separate elements in potable water inemergency situations. Thompson Water Works, Inc., the contractor, took 200hours to build the first unit. If direct and indirect labor costs average $50 perhour, and an 80% learning rate is assumed, estimate (a) the time needed to complete units 5 and 25, and (b) the total labor cost for the 25 units.arrow_forward
- Viva sells its waterproof phone case for $118 per unit. Fixed costs total $232,000, and variable costs are $53 per unit. (1) Determine the contribution margin ratio. per unit Contribution margin Contribution Margin Ratio Numerator: Denominator: Contribution Margin Ratio Contribution margin ratio %3D (2) Determine the break-even point in dollars. Numerator: Denominator: Break-Even Point in Dollars Break-even point in dollars %3Darrow_forwardA manufacturing company has the choice of two suppliers to buy a piece of equipment from to use in its process. Characteristics of these two suppliers and associated costs are tabulated below. The equipment from supplier A costs more to buy and maintain, but it also has more revenue per unit sold. Selling enough units will at some point make it worth the higher cost. How many units per year must the company sell in order to justify using supplier A (i.e. what is the breakeven number of units to sell)? Use an interest rate of 12% per year. Supplier A Supplier B Initial cost $4,000 $3,000 Sale price (revenue per unit) $4 $3 Transportation costs (per unit) $0 $1.25 Annual maintenance cost $1,400 $1,100 Salvage value $800 $700 Useful life of the equipment (years) 5 4arrow_forwardSince many U.S. Navy aircraft are at or near their usual retirement age of 30 years, military officials want a precise system to assess when aircraft should be taken out of service. A computational method developed at Carnegie Mellon maps in 3-D the microstructure of aircraft materials in their present state so that engineers can test them under different conditions of moisture, salt, dirt, etc. Military officials can then determine if an aircraft is fine, is in need of overhaul, or should be retired. If the 3-D system allows the Navy to use one airplane 2 years longer than it normally would have been used, thereby delaying the purchase of a $20 million aircraft for 2 years, what is the present worth of the assessment system at an interest rate of 8% per year?arrow_forward
- Evaluate a combined cycle power plant on the basis of the PW method when the MARR is 12% per year. Pertinent cost data are as follows : Power Plant (thousands of $) Investment cost $13,000 Useful life 15 years Market value (EOY 15) $3,000 Annual operating expenses $1,000 Overhaul cost—end of 5th year $200 Overhaul cost—end of 10th year $550 USING FUTURE WORTH (FW)arrow_forwardDefine the term capitalized cost and give a realworld example of something that might be analyzed using a capitalized cost evaluation technique.arrow_forwardFor the two alternatives, demonstrate that the sum of the incremental cash flow series (Z − X) over the LCM is equal to the difference in the sums of the individual cash flow series for X and Z. System X Z First cost, $ −40,000 −95,000 AOC, $ per year −12,000 −5,000 Salvage value, $ 6,000 14,000 Life, years 3 6arrow_forward
- Consider two air-conditioning systems with the estimates below. (a) Use AW analysis to determine the sensitivity of the economic decision to MARR values of 4%, 6%, and 8% per year. (b) Develop the spreadsheet functions that will display the six AW values. System 1 2 First cost, $ −10,000 −17,000 AOC, $ per year −600 −150 Salvage value, $ −100 −300 New compressor and motor cost at midlife, $ −1,750 −3,000 Life, years 8 12arrow_forwardThree methods to dispose of nonhazardous waste have been developed—land application, fluidizedbed incineration, and private disposal contract. Use AW analysis and an associated scatter chart of AW versus i values to select the economically best alternative for interest rates between i = 6 % and i = 24% in 3% increments. (Note: This is an extension of Problem 6.22.) Land Incineration Contract First cost, $ −150,000 −900,000 0 AOC, $/year −95,000 −60,000 −140,000 Salvage value, $ 25,000 300,000 0 Life, years 4 6 2arrow_forwardFor the following two AW relations, the breakeven point QBE in miles per year is closest to: AW1 =−23,000(A/P,10%,10) + 4000(A/F,10%,10) − 5000 − 4X AW2 = −8,000(A/P,10%,4) − 2000 − 6X (a) 1984 (b) 1224 (c) 1090 (d) 655arrow_forward
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Break Even Analysis (BEP); Author: Tutorials Point (India) Ltd.;https://www.youtube.com/watch?v=wOEkc3O_Q_Y;License: Standard YouTube License, CC-BY
Cost Volume Profit Analysis (CVP): calculating the Break Even Point; Author: Edspira;https://www.youtube.com/watch?v=Nw2IioaF6Lc;License: Standard Youtube License