ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 50P
(a)
To determine
To select: The best alternative based on computation of payback period.
(b)
To determine
To select: The best alternative based on future worth analysis.
(c)
To determine
To select: The best alternative based on benefit-cost ratio analysis.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Carlisle Company has been cited and must invest in equipment to reduce stack emissions or face EPA fines of $20,500 per year. An
emission reduction filter will cost $75,000 and have an expected life of 5 years. Carlisle's MARR is 10%/year.
Part a
What is the future worth of this investment? $
Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is £10.
It is proposed to place a cable on an existing pole line along the shore of a lake to connect two points on opposite sides. Which is more economical? Use future worth method and present worth method.
A road resurfacing project costs $250,000, lasts 5 years and saves $150,000 annually in patching costs. MARR is 12%. Determine the annual worth (in $)
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
Knowledge Booster
Similar questions
- Bailey, Inc., is considering buying a new gang punch that would allow it to produce circuit boards more efficiently. The punch has a first cost of $100,000 and a useful life of 15 years. At the end of its useful life, the punch has no salvage value. Annual labor costs would increase $2,000 using the gang punch, but annual raw material costs would decrease $12,000. MARR is 5%/ year. Solve, a. What is the future worth of this investment? b. What is the decision rule for judging the attractiveness of investments based on future worth? c. Should Bailey buy the gang punch?arrow_forwardTwo numerically controlled drill presses are being considered by the production department of Zunni's Manufacturing; one must be selected. Comparison data is shown in the table below. MARR is 10%/year. Drill Press T Drill Press M Click here to access the TVM Factor Table Calculator Part a * Your answer is incorrect. Initial Investment Estimated Life Estimated Salvage Value Annual Operating Cost Annual Maintenance Cost What is the future worth of each drill press? Drill Press T: $ Drill Press M: $ 40000 60000 $20,000 10 years $5,000 $12,000 $2,000 $30,000 10 years $7,000 $6,000 $4,000 Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±20.arrow_forwardYou are being asked to select a piece of machinery for the company you work for. Operating costs are an important criteria when selecting what machinery would be the best choice. What is the EUAW (Equivalent Uniform Annual Worth) of this investment that costs $59,900, has annual benefits of $8,343/year, annual costs of $2,450/year, and a disposal cost of $4,300 at the end of its useful life? It has a useful life of 12 years. Use a 10% MARR.arrow_forward
- Carlisle Company has been cited and must invest in equipment to reduce stack emissions or face EPA fines of $18,500 per year. An emission reduction filter will cost $75,000 and have an expected life of 5 years. Carlisle’s MARR is 10%/year. Solve, a. What is the future worth of this investment? b. What is the decision rule for judging the attractiveness of investments based on future worth? c. Is the filter economically justified?arrow_forwardIf you have the present worth of an alternative with a 5-year life, you can obtain its annual worth by:a. multiplying the PW by i.b. multiplying the PW by (A/F,i,5).c. multiplying the PW by (P/A,i,5).d. multiplying the PW by (A/P,i,5).arrow_forwardCh 5 economics Nancy’s Notions pays a delivery firm to distribute its products in the metro area. Delivery costs are $31,500 per year. Nancy can buy a used truck for $8,000 that will be adequate for the next 3 years. Operating and maintenance costs are estimated to be $24,000 per year. At the end of 3 years, the used truck will have an estimated salvage value of $3,200. Nancy’s MARR is 25%/year. What is the present worth of this investment? $arrow_forward
- Determine the present worth, future worth, and annual worth of the following engineering project when the MARR is 15% per year. Is the project acceptable? Investment cost $10,000Expected life 5 yearsMarket (salvage) value $1,000Annual receipts $8,000Annual expenses $4,000arrow_forwardAny help would be appreciated! Given the data for three different alternatives in the table below, determine the best alternative using the incremental rate of return (∆RoR) analysis. MARR =9%. A B C First cost $15,000 $25,000 $20,000 O &M Cost/ year 1,600 400 900 Benefit/year 8,000 13,000 9,000 Salvage value 3,000 6,000 4,600 Life in years 4 4 4 1. The better alternative between the first increment is ________________. A. Alt. A or Alt. B B. Alt. A C. Alt.C D. Alt. B 2. The better alternative between the second increment is ___________________. A. Alt. B or Alt. C B. Alt. B C. Alt. C D. Alt. Aarrow_forwardThe following information is provided for five mutually exclusive alternatives that have 20-year useful lives. If the MARR is 12%, which alternative be selected? Use incremental rate of return Alternatives A B D E Cost $4,000 $2,000 $6,000 $1,000 $9,000 Annual Benefit $639 $410 $761 $117 $785 PW of Benefit $7,330 $4,700 $8,730 $1,340 $9,000 Rate of Return 15% 20% 11% 10% 6%arrow_forward
- One of the mutually exclusive alternatives below must be selected. Base your recommendation on A(Sauer-Glock) cash flows when the MARR = 8% per year. Q Q Q 0 P ΕΟΥ 10 P Glock 40 The IRR on A(Sauer-Glock) is %. (Round to two decimal places.) 20 OU C 2P ΕΟΥ 10 Sauer 45 P/4 1 20arrow_forwardAcme Tools has four alternatives for an injection molding machine (A, B, C, D) as shown below. MARR is 20%. Use incremental cash flow analysis to determine the economically optimal system. Solve this problem in Excel, copy and paste the Excel model below, and provide an interpretation. A B C D Capital Investment $295,000 $350,000 $310,000 $340,000 Net Annual Revenue $75,000 $90,000 $75,000 $85,000 Residual Value $60,000 $82,000 $96,000 $85,000 Study Period 6 Years 6 Years 6 Years 6 Yearsarrow_forwardThe survey firm of Layer, Anderson, and Pope (MAP) LLP is considering the purchase of a piece of new GPS equipment. Data concerning the alternative under consideration are presented below. First Cost $28,000 Annual Income 7,000 Annual Costs 2,500 Recalibration at end of Year 4 4,000 Salvage Value 2,800 If the equipment has a life of eight years and MAP's minimum attractive rate of return (MARR) is 5%, what is the annual worth of the equipment?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education