Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 10, Problem 18P
Two municipal cell tower designs are being considered by the city of Newton. If the city expects a modified benefit–cost ratio of 1.0 or better, which design would you recommend based on the data that follows? Assume repeatability. The city's cost of capital is 10% per year.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Ken Allen, capital budgeting analyst for Bally Gears, Inc., has been asked to evaluate a proposal. The manager of the automotive division believes that replacing the robotics used on the heavy truck gear line will produce total benefits of $560,000 (in today's dollars) over the next 5 years. The existing robotics would produce benefits of $400,000 (also in today's dollars) over that same time period. An initial cash investment of $220,000 would be required to install the new equipment. The manager estimates that the existing robotics can be sold for $70,000.
Show how Ken will apply marginal cost-benefit analysis techniques to determine the following:
The marginal (added) benefits of the proposed new robotics is $______________
The marginal (added) cost of the proposed new robotics is $__________________
The net benefit of the proposed new robotics is
A sports wear factory has two alternative machines for producing jerseys. Costs are shown below. Minimum acceptable rate of return is 8%.What is the annual cost for machine X?
Find both for design A and B then decide which one is the most economical, thank you.
Chapter 10 Solutions
Engineering Economy (17th Edition)
Ch. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - A retrofitted space-heating system is being...Ch. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10P
Ch. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16PCh. 10 - Four mutually exclusive projects are being...Ch. 10 - Two municipal cell tower designs are being...Ch. 10 - Prob. 19PCh. 10 - Prob. 20PCh. 10 - Prob. 21PCh. 10 - Prob. 22PCh. 10 - You have been requested to recommend one of the...Ch. 10 - Prob. 24PCh. 10 - Prob. 25PCh. 10 - Prob. 26FECh. 10 - Prob. 27FECh. 10 - Prob. 28FECh. 10 - Prob. 29FECh. 10 - Prob. 30FECh. 10 - Prob. 31FE
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- I think these two questions are testing a similar type of concept. Why don't we include the 4.3 in q1 or 310 in q2 as cost and subtract itarrow_forwardBased on the incremental return shown and the company's MARR of 16% per year, the alternative that should be selected is _____ The project initial costs are such that A < C < B. Comparison Rate of Return, % (A-DN) (B-DN) (C-DN) (B-A) (C-A) (B-C) Alternative C Do nothing Alternative B Alternative A Cannot be determined. 17 25 19 14 18 12arrow_forwardEvaluate a combined cycle power plant on the basis of the PW method when the MARR is 18% per year. Pertinent cost data are as follows: Investment cost Useful life Market value (EOY 15) Annual operating expenses Annual expenses Overhaul cost-end of 5th year Overhaul cost-end of 10th year Power Plant (thousands of Php) Php 1,100,000 15 years Php 500,000 Php 50,000 Php 290,000 Php 12,500 Php 25,000arrow_forward
- Q#1) Select the most economical among the following mutually exclusive alternatives using PW and AW methods of analysis at interest rate of 10% per year: First cost ($) Annual Operating Cost ($/year) Major repair ($) Life (years) Salvage ($) Machine A 20,000 5,000 for the first year and increases by 1,000 each year none 10 2,000 Machine B 50,000 2,000 per year up to year 10 and 5,000 per year thereafter 5,000 every 5 years including at year 40 40 5,000 Q#2) Find the Rate of Return for machines A and B in question #1 if the annual revenues for each machine is estimated at $20,000 per year.arrow_forwardEvaluate a combined cycle power plant on the basis of the FW method when the MARR is 12% per year. Pertinent cost data are as follows : Power Plant (thousands of $) Investment cost $13,000 Useful life 15 years Market value (EOY 15) $3,000 Annual operating expenses $1,000 Overhaul cost—end of 5th year $200 Overhaul cost—end of 10th year $550 WITH DIAGRAM CASH FLOW THANK YOUarrow_forwardABC Corporation resells one type of candle. It has 250 working days. Each day, it sells an average of 500 boxes but may sometimes sell a maximum of 600 boxes. The supplier takes an average of 5 days to deliver the order. During busier times, the supplier may take 7 days.Based on ABC’s records, ordering cost average P400 per order. Storage cost per box average P5 per year. There is also an opportunity cost of 1% per year for every peso invested in inventories. Each box of candles costs P450.If ABC would continue its current inventory management policy, it would keep 10,000 boxes as safety stock and order ten- days-worth of inventory.B. EOQ 8. How much would the ordering cost for the year be on average if the economic order quantity was followed?9. What would the average number of boxes be if the economic order quantity was used (excluding safety stock)?Round off to two decimal places.10. How much would the carrying cost for the year if the economic order quantity was followed (excluding…arrow_forward
- WHICH IS MORE ECONOMICAL? USE METHOD OF COMPARISON OF ALTERNATIVES! In a cold storage plant, it is desired to determine whether to use insulation two inches thick or three inches thick in insulating the walls of the cold storage ware house. Heat absorb through the walls without insulation would cost P96.00 per year per squaremeter. A two-inch insulation will cost P30.40 per square meter and will cut out 89% of the loss. A three-inch insulation will cut out 92% of the loss and will cost P65.00 per square meter. Using a life 15 years for the insulation with no salvage value and a minimum attractive return of 8%, what thickness of insulation should be used?arrow_forwardDexcon Technologies, Inc., is evaluating two alternatives to produce its new plastic filament with low friction properties for creating custom bearings for 3-D printers. The estimates associated with each alternative are shown below. Using a MARR of 16% per year, which alternative has the better present worth and what is that value (select the closest value)? Method First Cost AOC, per Year Salvage Value Life DDM $170,000 $65,000 $4,000 2 years LS $350,000 $40,000 $29,000 4 years DDM with a PW--$473,000 LS with a PW --$445,900 LS with a PW --$222,055 DDM with a PW--$109,300arrow_forwardTwo automatic systems for dispensing maps are being compared by the state highway department. The accompanying breakeven chart of the comparison of these systems (System I vs. System II) shows total yearly costs for the number of maps dispensed per year for both alternatives. Answer the following questions. (a) What is the fixed cost for System I? (b) What is the fixed cost for System II? (c) What is the variable cost per map dispensed for System I? (d) What is the variable cost per map dispensed for System II? (e) What is the breakeven point in terms of maps dispensed at which the two systems have equal annual costs? (f) For what range of annual number of maps dispensed is System I recommended? (g) For what range of annual number of maps dispensed is System II recommended? (h) At 3000 maps per year, what are the marginal and average map costs for each system?arrow_forward
- Preliminary plans are under way for the construction of a new stadium for a major league baseball team. City officials have questioned the number and profitability of the luxury corporate boxes planned for the upper deck of the stadium. Corporations and selected individuals may buy the boxes for $340,000 each. The fixed construction cost for the upper deck area is estimated to be $5,780,000, with a variable cost of $170,000 for each box constructed. (a) What is the break-even point for the number of luxury boxes in the new stadium? x = (b) Preliminary drawings for the stadium show that space is available for the construction of up to 52 luxury boxes. Promoters indicate that buyers are available and that all 52 could be sold if constructed. (ii) What profit is anticipated? (Enter a negative value if a predicted loss.) $arrow_forwardEvaluate a combined cycle power plant on the basis of the Present Worth Method (PW) when MARR is 12 % per year.Pertinent cost data are as follows: (Power Plant (thousands of $) Investment Cost: $12693 Useful life: 15 ears Market Value (EOY 15) $3,000 Annual Operating expenses: $1,000 Overhaul cost-end of 5th year: $1897 Overhaul cost-end of 10th year. $1819arrow_forwardA sportswear factory has two alternative machines for producing jerseys. Costs are shown below. Minimum acceptable rate of return is 8%.What is the annual cost for machine Y?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
Valuation Analysis in Project Finance Models - DCF & IRR; Author: Financial modeling;https://www.youtube.com/watch?v=xDlQPJaFtCw;License: Standard Youtube License