Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Chapter 8, Problem 6P
To determine

Calculate the present value.

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Better Corporation can purchase a piece of equipment now for $120,000 or buy it 4 years from now for $188,000. The MARR requirement for the plant is a real return of 14% per year. If an inflation rate of 6% per year must be accounted for, what is the Future Value with inflation? a) $188,000 b) $255,873 c) $ 88,169 d) $120,000 Should the company buy the machine now or later? a) Now b) Later
A new 21-kW power substation was built in 2016 in Gibson County for $1.4 million. Weakley County, which is nearby, is planning to build a similar though smaller (18-kW) substation in 2019. The inflation rate has averaged 1.5% per year. If the power sizing exponent is .85 for this type of facility what is the estimated cost of construction of the Weakley County substation?
Because retail supermarket corporations operate on a low ROR, it is common to use a market MARR of about 3% per year. What real return rate is implied from a market interest rate of 3% per year when the annual inflation rate is 4% per year? Explain your answer
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