ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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The concept of present value states that an amount of money today is worth more than the same amount in the future.To put it another way, money received in the future is less valuable than money received today.The present value of an investment takes into account any interest rate that it may earn. The sum of future investment returns discounted at a specified level of rate of return expectation yields the present value , which is calculated as the sum of future investment returns are discounted at a predetermined rate of return expectation.
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- Each of the three mutually exclusive alternatives shown has a 5-year useful life. If the MARR is 10%, which alternative should be selected? Solve the problem by benefit-cost ratio analysis. A B Cost Uniform annual benefit $600.0 158.3 $500.0 138.7 с $200.0 58.3arrow_forwardThe city of St. John's is intalling a new swimming pool in the east end recreation centre. One design being considered is a reinforced concrete pool that will cost $5,400,000 to install. Thereafter, the inner surface of the pool will need to be refinished and painted every 5 years at a cost of $440,000 per refinishing. Assuming that the pool will have essentially an infinite life, what is the present worth of the costs associated with the pool design? The city uses a MARR of 10%. If the installation costs, refinishing costs, and MARR are subject to 5% or 10% increases or decreases, how is the present worth affected? (NOTE: Text answers are case sensitive and every field in this question is worth equal value) All calculations are performed using 4 significant figures. (a) Complete the table below: Sensitivity Analysis Calculated Values Parameter Construction Costs Refinishing Costs MARR [%] -10% -5% Base Case 5,400,000 440,000 10 +5% +10%arrow_forwardWhicFof the following might be included as a disbursement on a cash budget? Depreciation on factory Income taxes equipment to be paid A) Yes Yes B) Yes No No Yes D) No No Option (A) Option (B) Option (C) Option (D) 20arrow_forward
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- Question 2 Full explain this question and text typing work only do not ignore this linearrow_forwardFor the following 4 options (one must be chosen), what is the smallest MARR for the "Do Nothing" option to be chosen? Option A Year O Cost ($) Years 1-10 Benefit ($) 5.26% 9.59% 7.09 % 10.69% "Do Nothing" 0 O -1,000 153 B -1,500 207 C -2,000 261arrow_forwardPresent wortharrow_forward
- what's the PW of Alternative A and B?arrow_forwardCan someone help me to solve this problem using the present worth analysis? Using neatly written hand calculations. PLEASE AND THANK YOU!!!!arrow_forwarda. Find the breakeven market value.b.Find the breakeven annual expense.C.Is the decision more sensitive to changes in market value or annual expense? How doyou know?arrow_forward
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