ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Equipment needed at Valero Corporation refinery for the conversion of corn stock toethanol, a cleaner burning gasoline additive, will cost $175,000 and have net cashflows of $35,000 the first year, increasing by $10,000 per year over the life of 5 years.Develop a spreadsheet chart that plots AW vs interest rate to show where (what interestrate) the project switches from financially justified to unjustified. Use AW as the verticalaxis of the chart, and interest (i) as the horizontal axis of the chart. Use a range ofinterest rates spanning from 10% to 20%, and use increments of 1%. Label both axesand use a title for the chart.arrow_forwardNadine Chelesvig has patented her invention. She is offering a potential manufacturer two contracts for the exclusive right to manufacture and market her product. Plan A calls for an immediate single lump sum payment to her of $175,000. Plan B calls for an annual payment of $14,000 plus a royalty of $3.90 per unit sold. The remaining life of the patent is 10 years. Nadine uses a MARR of 10%/year. What must be the uniform annual sales volume of the product for Nadine to be indifferent between the contracts, based on an units annual worth analysis? Carry all interim calculations to 5 decimal places and then round your final answer to the nearest unit. The tolerance is ±10.arrow_forwardThe capitalized cost (CC) of the given project whose Cash Flow diagram is given below is closest to: = 10% per year 5 6 7 8 9 10 11 2 3 A= $2,000 PO=S30,000 C-55000 (Recurring every 5 y ears) C=55000 (Recurring every 5 years) Captalized Cost= ?arrow_forward
- ABC Beverage, LLC, purchases its 355-ml cans in large bulk from Wald-China Can Corporation. The finish on the anodized aluminum surface is produced by mechanical finishing technologies called brushing or bead blasting. Engineers at Wald are switching to more efficient, faster, and cheaper machines to supply ABC. Use the estimates and MARR = 8% per year to select between the two alternatives. Brush Alternative Bead Blasting Alternative P $-400,000 $-400,000 n 6 years large Salvage Value $50,000 no value AOC Nonlabor $-60,000 in year 1, decreasing by $2500 annually starting in year 2 $-70,000 per yeararrow_forwardAnswer please and take likearrow_forwardThe cost of the extending a certain road at Yellowstone National Park is $1.7 million. Resurfacing and other maintenance are expected to cost $350,000 every 3 years with an interest rate of 6% per year. a) What is the Annual Worth based capitalized cost of the road? b) How will the answer (a) change if its Salvage is expected to be $3 million at the end of its useful Life?arrow_forward
- 1. The annual worth for years 1 through infinity of $75,000 now, $25,000 per year in years 1 through 15 and S40,000 per year in years 16 through infinity at a 10% interest per year is closest to: (a) $27,500 (b) $36,000 (c) $44,000 (d) $ 19,500 1. For the estimates in table below, calculate the equivalent annual cost of the project: First Cost, $ -950,000 Replacement Cost, year 2 AOC, $/ year Salvage value, $ -450,000 -600,000 175,000 Life, years 4 Interst Rate % 10arrow_forwardThe following five alternatives that are evaluated by the rate of return method, If the alternatives are independent and the MARR is 15% per year, the onels) to select is (are) Incremental ROR, N. When Compared with Alternative Initial Investment,S Alternative Alternative A BC DE 10.6 27.3 194 353 25.0 -25,000 -35,000 13.1 38.5 24.4 -40,000 13.4 46.5 27.3 26.8 -60,000 25.4 -75,000 20.2 Only D O Only D and E O Only A D, and E O Only Earrow_forwardMost likely estimates for a project are as follows. MARR Useful life Initial investment Receipts - Expenses (R-E) 10% per year 9 years $5,000 $1,200/year Click the icon to view the relationship between the PW and the percent change in parameter. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. (b) To which variable is the PW most sensitive to? OA. Receipts - Expenses OB. Usefule life OC. Initial Investment (a) Determine whether the statement "An initial investment of $6,000 keeps the investment economical." is true or false. O False O Truearrow_forward
- Three mutually exclusive electric-vehicle battery systems are being investigated by a large automobile manufacturer. Pertinent data are given below: Solve, a. Use the PW method to select the best battery system. The MARR is 15% per year, and the system chosen must provide service for 10 years. Assume repeatability. b. Confirm your recommendation in Part (a) using the IRR method.arrow_forwardSelect the best option using Rate of Return Analysis (incremental Rate of Return) \table[[MARR, 20%,,,], [Useful Life, 5 years,,,], [Brand, D1, D2, D3, D4]] \table[[\table[[Capital], [Investment]], $100,00, $140, 600, $148, 200, $122,000. Solve using excel spreadsheet. ف c 3. Select the best option using Rate of Return Analysis (incremental Rate of Return) MARR Useful Life Brand 20% 5 years D1 D2 D3 D4 Capital $100,00. $140,600 $148,200 $122,000 Investment Annual Expenses $29,000 $16,900 $14,800 $22,100 Salvage $10,000 $14,000 $25,600 $14,000arrow_forward
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