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
Question
Chapter 10, Problem 22P
(a):
To determine
Port manage analysis.
(b):
To determine
Calculated the new incremental cost benefit ratio
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
MEGA BRIDGE SDN BHD has been offered by government to construct a bridge. Based on PROJECT X
AND PROJECT Y, the company need to select one project at a time. A cost estimation has been made
in order to decide which project should be undertaken and the cost factors relating to the two projects
are shown in Table.
The RnD phase for both projects take 2 months and the construction phase take 16 months (with 5
working days per week and 10 working hours per day). The volume for each beam and column are
1000 m3 and 750 m3 respectively. The cost of concrete is RM 50 per unit volume. The revenue for the
bridge construction comes from the toll payment by the users of the bridge. The toll fees for each
vehicle that passes through the bridge is RM 2.00 per vehicle. The average number of vehicle passes
through the bridge is 50,000 per month
Calculate the total cost for both projects
COST FACTORS
PROJECT X
PROJECT Y
Concrete beams and columns
10 beams
7 beams
needed
20 columns
14 columns
Equipment…
Stephen Herron, owner of a small manufacturer, Isis Technology (IT), has asked you to provide your opinion on the options available to replace an old machine. Two suppliers have provided price and cost estimates. The supplier of the old machine, Canadian Equipment Inc. (CEI), has improved its equipment but continues with the same specialized design. A new supplier, Alto Design Equipment (ADE), has a new innovative design that can process any one of the products produced by IT.
Stephen is excited about the new design. Its products usually have a short life cycle where sales increase for five years and then decline. IT could use the new design proposed by ADE to process its products that will stabilize output over the next five years. IT’s cost of capital is 11%. After careful analysis of the two designs, he prepares the following forecast of the expected cash flows.
After-tax cash inflows and outflows for CEI and ADE equipment ($000)
Machine
Initial investment
Incremental…
Identify the special cash flow category for each of the following.
While developing a new product line, Cook Company spent $3 million two years ago to build a plant for a new product. Ultimately that project was not pursued. You are now evaluating a new project and would locate production inside of this building. What type of cash flow is the cost of the building?
You hope to increase membership at your yoga studio by opening a smoothie bar inside of the yoga studio. When considering the feasibility of the smoothie bar, what type of cash flow is the increased studio membership?
Suppose Walker Publishing Company is considering bringing out a new finance text whose projected revenues include some revenues that will be taken away from another of Walker's books. What type of cash flow are the lost sales on the older book?
You currently operate a taco truck but are considering converting the food truck into a bubble tea truck. What type of cash flow are the profits currently earned…
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
Similar questions
- The PARC Company can purchase gizmos to be used in building whatsits for $90 each. PARC can manufacture their own gizmos for $7000 per year overhead cost plus $25 direct cost for each gizmo, provided they purchase a gizmo maker for $100,000. PARC expects to use gizmos for 10 years. The gizmo maker should have a salvage value of $20,000 after 10 years. PARC uses 12% as its minimum attractive rate of return. At what annual production rate N should PARC make its own gizmos?arrow_forwardMy answer is yes. Can you please suggest better ideas? Thank you! The ARA Railroad owns a piece of land along one of its right-of-ways. The land originally cost ARA $100,000. ARA is considering building a new maintenance facility on this land. ARA determined that the proposal to build the new facility is acceptable if the original cost of the land is used in the analysis, but the proposal does not meet the railroad’s project acceptance criteria if the land cost is above $500,000. An investor has recently offered ARA $1 million for the land. Should ARA build the maintenance facility at this location? Why or why not?arrow_forwardUS Airways owns a piece of land near the Pittsburgh International Airport. The land originally cost USAirways $375,000. The airline is considering building a new training center on this land. US Airwaysdetermined that the proposal the new facility is acceptable if the original cost of the land is used in theanalysis, but the proposal does not meet the airline’s project acceptance criteria if the land cost is above$850,000. A developer recently offered US Airways $2.5 million for the land.Explain fully if US Airways should build the training facility at this location or not.arrow_forward
- A supplier of metal aluminium serving a Coca-Cola bottler in a large country in Latin America builds a plant along with associated production equipment at an annualised investment cost of 28 million per year. The plant slocated directly next to the Coca- Cola bottler's bottling factory, which economises on transportation costs. The marginal cost of producing a can is $0.3 per can. Under a proposed contract, Coca-Cola will pay the supplier $0.9 per can to produce 199 million cans per year. However, if the can supplier does not sell cans to the Coca-Cola bottler, its best available alternative is to sell cans to a Pepsi bottler. The Pepsi bottler would pay the same price for cans that Coca- Cola would pay and would buy the same number of cans. Even though the Pepsi bottler is the closest bottling operation to Coca-Cola's, it is located nearly 1,000 miles away, which makes the marginal cost to the can company of selling to Pepsi $0.4 per can For your answers, please do not answer in…arrow_forwardA construction firm purchased a used crane 2 years ago for $445,000. Its operating cost is $325,000 per year and it's expected salvage value 3 years from now is $145,000. The firm's CEO is considering replacing the presently owned used crane with a brand new crane with a much higher load limit which will cost $1.5 million. The operating cost of the new crane will be $260,000 per year, but its higher load limit will allow the contractor to generate extra revenue that is expected to amount to $525,000 per year. The new crane can probably be sold for $850,000 3 years from now. You have been asked to determine how much the presently owned crane would have to be worth on the open market today for the annual worth (AW) values of the two machines to be the same over a 3-year planning period. The contractor's MARR is 9% per year. The presently owned crane should be worth $ Con the open market.arrow_forwardA process plant making 5000 kg/day of a product selling for $1.75/kg has annual variable production cost of $2M at 100 % capacity and fixed costs of $700,000. What is the fixed cost per kg at the break even point ? If the selling price of the product is increased by 10%, what is the dollar increase in net profit at full capacity if the income tax rate is 35% of the gross earnings?arrow_forward
- If the property will be immediately be replaced at a market value of 15,000, what will its sunk cost?arrow_forwardMs. T. Potts, the treasurer of Ideal China, has a problem. The company has just ordered a new kiln for $400,000. Of this sum, $50,000 is described by the supplier as an installation cost. Ms. Potts does not know whether the Internal Revenue Service (IRS) will permit the company to treat this cost as a tax-deductible current expense or as a capital investment. In the latter case, the company could depreciate the $50,000 straight-line over 5 years. The tax rate is 30% and the opportunity cost of capital is 5%. What is the present value of the cost of the kiln if the installation cost is treated as a separate current expense? What is the present value of the cost of the kiln if the installation cost is treated as a part of the capital investment? Note: Round your answer to the nearest whole dollar amount.arrow_forwardKlinken Corporation's contribution margin ratio on the sale of its most popular product is 42% . The product is priced at $100 , annual fixed expenses are $900,000 . Management is evaluating two options : (1) lowering variable costs by 15 and (2) reducing fixed expenses by 15% .arrow_forward
- A manufacturing firm maintains one assembly line to produce signal generators. Weekly demand for the generators is 35 units, and the line operates for 7 h/d, 5 d/wk. What is the maximum production time per unit required of the line in order to meet demand?arrow_forwardA company makes a product with a selling price of $20 per unit and variable costs of $ 8 per unit. The fixed costs for the period are $30762. What is the required output level to make a target profit of $15,000?arrow_forwardThe management of First American Bank was concerned about the potential loss that might occur in the event of a physical catastrophe such as a power failure or a fire. The bank estimated that the loss from one of these incidents could be as much as $100 million, including losses due to interrupted service and customer relations. One project the bank is considering is the installation of an emergency power generator at its operations headquarters. The cost of the emergency generator is $800,000, and if it is installed, no losses from this type of incident will be incurred. However, if the generator is not installed, there is a 10% chance that a power outage will occur during the next year. If there is an outage, there is a .05 probability that the resulting losses will be very large, or approximately $80 million in lost earnings. Alternatively, it is estimated that there is a .95 probability of only slight losses of around $1 million. Using decision tree analysis, determine whether the…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