ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Chapter 9, Problem 38P
To determine
The maximum amount that can be paid to build the incinerator by computing
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An industrial park is being planned near a river. The river occasionally floods, and as a result theindustrial park planners are trying to decide how large of an embankment to build as protection. Theembankment is expected to last 50 years. The MARR is 12%. If the water rises above theembankment (regardless how much) and flooding occurs, the cost is $300,000. Using the data below,find the expected annual costs in each case and determine which embankment height should beselected.Embankmentheight(meters)Initial Costof EmbankmentProbability of water rising aboveembankment in any given year2.0 $100,000 0.3302.5 $165,000 0.1253.0 $300,000 0.0403.5 $400,000 0.0204.0 $550,000 0.01
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Burns City may build a garbage incinerator on the outskirts of town. Environmental impact statements and safety planning/inspection will cost $21,000 (payable at start of construction). The annual upkeep and operating costs are expected to be $34,000. The new incinerator will save $14 each annually for 24,000 billed customers. Consultants have estimated an annual disbenefit to the surrounding area of $36,500. At the end of a 10-year useful life the incinerator will be dismantled at a cost of $50,000. Using benefit-cost ratio analysis, and assuming a cost of money of 5% what is the maximum that Burns City can pay to build the incinerator?
A company is currently paying its employees$0.56 per mile to drive their own cars on companybusiness. The company is considering supplyingemployees with cars, which would involve purchasing at $25,000 with an estimated three-year life, a netsalvage value of $8,000, taxes and insurance at a costof $1,200 per year, and operating and maintenanceexpenses of $0.30 per mile. If the interest rate is 10%and the company anticipates an employee’s annualtravel to be 30,000 miles, what is the equivalent costper mile (neglecting income taxes)
Chapter 9 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 9 - Prob. 2QTCCh. 9 - Prob. 3QTCCh. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4PCh. 9 - Prob. 5PCh. 9 - Prob. 6PCh. 9 - Prob. 7PCh. 9 - Prob. 8P
Ch. 9 - Prob. 9PCh. 9 - Prob. 10PCh. 9 - Prob. 11PCh. 9 - Prob. 12PCh. 9 - Prob. 13PCh. 9 - Prob. 14PCh. 9 - Prob. 15PCh. 9 - Prob. 16PCh. 9 - Prob. 17PCh. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 21PCh. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Prob. 25PCh. 9 - Prob. 27PCh. 9 - Prob. 28PCh. 9 - Prob. 29PCh. 9 - Prob. 30PCh. 9 - Prob. 31PCh. 9 - Prob. 32PCh. 9 - Prob. 33PCh. 9 - Prob. 34PCh. 9 - Prob. 35PCh. 9 - Prob. 36PCh. 9 - Prob. 37PCh. 9 - Prob. 38PCh. 9 - Prob. 39PCh. 9 - Prob. 40PCh. 9 - Prob. 41PCh. 9 - Prob. 42PCh. 9 - Prob. 43PCh. 9 - Prob. 44PCh. 9 - Prob. 45PCh. 9 - Prob. 46PCh. 9 - Prob. 47PCh. 9 - Prob. 48PCh. 9 - Prob. 49PCh. 9 - Prob. 50PCh. 9 - Prob. 51PCh. 9 - Prob. 52PCh. 9 - Prob. 53PCh. 9 - Prob. 54PCh. 9 - Prob. 55PCh. 9 - Prob. 56PCh. 9 - Prob. 57PCh. 9 - Prob. 58PCh. 9 - Prob. 59PCh. 9 - Prob. 60PCh. 9 - Prob. 61PCh. 9 - Prob. 62PCh. 9 - Prob. 63PCh. 9 - Prob. 64PCh. 9 - Prob. 65PCh. 9 - Prob. 66PCh. 9 - Prob. 67PCh. 9 - Prob. 68PCh. 9 - Prob. 69PCh. 9 - Prob. 70PCh. 9 - Prob. 71PCh. 9 - Prob. 72PCh. 9 - Prob. 73PCh. 9 - Prob. 74PCh. 9 - Prob. 75PCh. 9 - Prob. 77PCh. 9 - Prob. 78PCh. 9 - Prob. 79PCh. 9 - Prob. 80PCh. 9 - Prob. 81PCh. 9 - Prob. 83PCh. 9 - Prob. 84PCh. 9 - Prob. 85PCh. 9 - Prob. 86PCh. 9 - Prob. 87PCh. 9 - Prob. 88P
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- 11-8. The Ford Motor Company is considering three mutually exclusive electronic stability control systems for protection against rollover of its automobiles. The investment (study) period is four years, and MARR is 12% per year. Data for the fixture costs of the systems are as follows. Alternatives В Annual savings MV (after 4 years) Capital investment $12,000 $15,800 $8,000 $4,000 $5,200 $3,000 $3,500 $1,500 $3,000 IRR 19.2% 18% 23% Plot the AW of each alternative against MARR as the MARR varies across this range: 4%, 8%, 12%, 16%, and 20%. What can you generalize about the range of the MARR for which each alternative is preferred? (11.2)arrow_forward5-S2 A new recycling sorting and processing line is proposed to serve a medium size city. The installed cost of the new line is $2,400,000. The residual value after ten years is estimated at $480,000. The unit would produce recycled material ready for resale at a rate of $0.15/pound, and would run for ten years. How much recyclable material must be generated every year to justify the project (i.e., for the present value of the project to be positive). Use an interest rate of 9%.arrow_forwardAnswer is 5.6 Please show solutionarrow_forward
- Project A1 Project A2 Investment $1,100,000 $1,600,000 Required at n=0 $500,000 $370,000 $300,000 $250,000 $200,000 $140,000 $200,000 $400,000 $320,000 $550,000 $500,000 $240,000 1 2 3 4 5 6.arrow_forwardGiven the following information, find the optimal indefinite plan. MARR = 12%. %3D ND* = 2, Nc* = 4 AECD* > AECC AECC• = 5030 The Marginal Cost (cost for the n'th year) for the defender for given years are below n=1 n=2 n=3 n=4 n=5 n=6 n=7 n=8 MCD 4930 5000 5260 5500 5900 6440 O ljo, 0),(j, 4).∞ (jo, 1).(j, 4). (jo, 2).(j, 4).. O Go, 3).(j, 4). O Gio. 5).G, 4)0 None of the abovearrow_forwardA company is considering supplying employees with company cars. Employee travel is expected to be a total of 30,000 miles per year for all employees. Supplying employees with company cars would involve the following cost components: Car purchase: $22,000 with an estimated 3-year life Salvage value: $5000 Insurance cost: $1000/year Operating and maintenance expenses: $0.22 per mile The company uses a MARR of 10%. The total cost per mile of providing company cars to employees is: __________ (Round the answer to two decimal places. Do not enter the dollar symbol or the words per mile in you answer. If the number is a fraction less than one, include the leading zero in the answer. eg. 0.12) The company pays employees $0.40 per mile to use their own car. Compare this with the number you calculated in the previous question. The company should provide cars to its employees? Type Yes or No for the decision:…arrow_forward
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