Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 5, Problem 28P
To determine

Calculate the negotiating price.

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An aircraft hangar requires a new high-efficiency HVAC system for environmental control and reducing heating and cooling expenses. The cost of the HVAC system is $5.0 million, and the annual savings are expected to be $400,000. The useful life of the HVAC system is 20 years, and its residual value is zero. a) What is the simple payback period? b) What is the internal rate of return? (Note: You can use the tables in the book or Excel to find the IRR, but in either case show work and/or cut & paste a spreadsheet. If using the tables an approximate answer will be acceptable)
A company is considering purchasing equipment costing $70,000. The equipment is expected to reduce costs from year 1 to 3 by $7,000, year 4 to 8 by $10,000, and in year 9 by $6,000. In year 9, the equipment can be sold at a salvage value of $15,000. Calculate the internal rate of return (IRR) for this proposal. ..... The internal rate of return is %. %6. (Round to the nearest tenth as needed.)
Suppose that you have just completed the mechanical design of a high-speed automated palletizer that has an investment cost of $3,800,000. The existing palletizer is quite old and has no salvage value. The market value for the new palletizer is estimated to be $430,000 after nine years. One million pallets will be handled by the palletizer each year during the nine-year expected project life. What net savings per pallet (i.e., total savings less expenses) will have to be generated by the palletizer to justify this purchase in view of a MARR of 18% per year? Use the AW method. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 18% per year. The net savings required to be generated by the new palletizer to justify its purchase are $ per pallet (Round to the nearest cent)
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