Engineering Economy
Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
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Chapter 8, Problem 51SE
To determine

Calculate the present worth

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The capital investment for a new machine is $950,000. The estimated annual expense, in year zero dollars, is $92,600. This expense is estimated to increase at the rate of 5.7% per year (F). Assume that f= 4.5%, N = 7 years, MV at the end of year 7 is 10% of the capital investment, and the MARR (in real terms) is 10.05% per year. What uniform annual revenue (before taxes), in actual dollars, would the machine need to generate to break even?
You bought a car 5 years ago for $30,000. This type of car is known to depreciate at a compounded annual rate of 8% per year (given normal mileage and wear-and-tear). If your car depreciated at this rate, how much is it worth today? (Hint: let r=-0.08 and solve for FV).
The International Parcel Service has installed a new radio frequency identification system to help reduce the number of packages that are incorrectly delivered. The capital investment in the system is $101,193 and the projected annual savings are estimated to start at $15,000 at EOY 1 and grow by 20% each year thereafter. The system's market value at the EOY 10 is $10,000, and the MARR is 18% per year, compounded weekly. What year will the FC be recovered? ΕΟΥ
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