A company that manufactures amplified pressure transducers is trying to decide be- tween the machines shown below. The company has a MARR of a real 4% per year, and it expects inflation to be 2% per year. Use PW analysis to determine which company the engineer should recommend. Variable Speed First cost, $ -250, 000 Annual operating cost, $/year -231, 000 Overhaul in year 3, $ Overhaul in year 4, $ Salvage value, $ Life, years -140, 000 50,000 3 Dual Speed -224, 000 -235, 000 -26, 000 10,000 6

The cost of constructing a roundabout (R/A) in a low-traffic residential neighborhood 5 years ago was $625,000. A civil engineer designing another R/A that is almost the same design estimates the cost today will be $740,000. If the cost had increased only by the inflation rate over the 5 years, determine the inflation rate per year.

Using 1913 as the base year with a value of 100,the ENR construction cost index (CCI) for October2005 was 7562.50. For October 2006, the CCIvalue was 7882.53. (a) What was the inflation ratefor construction for that one-year period? (b) Theindex value for January 2007 was 7879.58. Whatwas the inflation rate over the period October2006 and January 2007?

A machine currently under consideration by Marcus Industries has a cost of $31, 000. When the purchasing manager complained that a similar machine the company purchased 5 years ago was much cheaper, the salesman responded that the cost of the machine has increased solely in accordance with the inflation rate, which has averaged 5% per year. When the purchasing manager checked the invoice for the machine he purchased 5 years ago, he saw that the price was $25,000. Was the salesman telling the truth about the increase in the cost of the machine? What should the machine cost now, provided the price increased by only the inflation rate? Use the formula