ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Chapter 13, Problem 44P
To determine
To find: Whether the old line should be replaced with new line or not.
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SUBJECT: ENGINEERING ECONOMICS
Show the complete solution. The final answer is given below.
Q3. Eideas signed a contract to lease a building at P60,000 a year with an annual increase of P1,000 a year for 5 years. Payments are to be made at the end of each year, starting one year from now. If money is worth 8%, what lump sum paid today is equivalent to the 5-year lease-payment plan?
Answer: P=246,935.03
Complete each problem in excel. Submit your excel worksheet in EXCEL format so I can see how you solved the problems. Please MARK or Outline your answers so I can tell where they are.
Create a CASH Flow chart and answer the following questions.
The equipment will cost $620,000 and lasts the entire 11 year project.
At the end of 11 years, the equipment will be sold for $91,000 in salvage.
Operating costs start at $108000 and go up by 3.9% every tear.
Benefits begin at $190000 and go up by 6.1% every year.
The MARR value is 14%
Use a MARR of 14% BUILD the CASH FLOW chart for this project.
3a. Determine the NPW
3b. Determine the AW
3c. Determine the FW
3d. Determine the IRR
3e. Graph the NPW versus MARR
3f. Are we making or losing money at 14% MARR?
How can you tell?
Who doesn't love food trucks? Imagine you are being offered to invest in a food truck as part of
a restaurant business. The truck including equipment costs $100,000, has an expected useful
lifespan of 10 years, and the estimated salvage value then is $5,000. The food truck will require a
$20,000 overhaul after 6 years of use. The food truck costs $5000 per year to operate and
maintain, but it will save the underlying restaurant operator $40,000 per year in labour and lease
payments. As you are contemplating the offer you evaluate the economics of this idea...
Your cost of borrowing money is 10%. You set yourself an MARR of 14%. What should you
do? Invest or not?
a)
Use a timeline graph
to summarize cash
outflows and inflows over time.
b)
Conduct the ERR analysis. Explain each step of your analysis and related
assumptions. Report the level of ERR for this proposal and discuss whether or not you
(the decision maker) should invest?
Chapter 13 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 13 - Prob. 1QTCCh. 13 - Prob. 2QTCCh. 13 - Prob. 3QTCCh. 13 - Prob. 4QTCCh. 13 - Prob. 5QTCCh. 13 - Prob. 1PCh. 13 - Prob. 2PCh. 13 - Prob. 3PCh. 13 - Prob. 4PCh. 13 - Prob. 5P
Ch. 13 - Prob. 6PCh. 13 - Prob. 7PCh. 13 - Prob. 8PCh. 13 - Prob. 9PCh. 13 - Prob. 10PCh. 13 - Prob. 11PCh. 13 - Prob. 12PCh. 13 - Prob. 13PCh. 13 - Prob. 14PCh. 13 - Prob. 15PCh. 13 - Prob. 16PCh. 13 - Prob. 17PCh. 13 - Prob. 18PCh. 13 - Prob. 19PCh. 13 - Prob. 20PCh. 13 - Prob. 21PCh. 13 - Prob. 22PCh. 13 - Prob. 23PCh. 13 - Prob. 24PCh. 13 - Prob. 25PCh. 13 - Prob. 26PCh. 13 - Prob. 27PCh. 13 - Prob. 28PCh. 13 - Prob. 29PCh. 13 - Prob. 30PCh. 13 - Prob. 31PCh. 13 - Prob. 32PCh. 13 - Prob. 33PCh. 13 - Prob. 34PCh. 13 - Prob. 35PCh. 13 - Prob. 36PCh. 13 - Prob. 37PCh. 13 - Prob. 38PCh. 13 - Prob. 39PCh. 13 - Prob. 40PCh. 13 - Prob. 41PCh. 13 - Prob. 42PCh. 13 - Prob. 43PCh. 13 - Prob. 44PCh. 13 - Prob. 45PCh. 13 - Prob. 46PCh. 13 - Prob. 47PCh. 13 - Prob. 48PCh. 13 - Prob. 49PCh. 13 - Prob. 50PCh. 13 - Prob. 51PCh. 13 - Prob. 52PCh. 13 - Prob. 53PCh. 13 - Prob. 54PCh. 13 - Prob. 55PCh. 13 - Prob. 56P
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