Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Chapter 10, Problem 27FE
To determine
Calculated the incremental cost benefit ratio
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You have been asked to perform an economic evaluation of two projects and recommend one of
them for implementation. The project parameters are as follows:
Project A
Project B
Discount
Rate
4.0%
4.0%
Your analysis concludes that:
Project Cost
$1,000,000
$750,000
Project Life
(yrs)
10
15
Elec. Savings Elec. Cost
(kWh/yr)
($/kWh)
800,000
600,000
O Project A is preferable, but Project B also has attractive performance.
O Project B is preferable, but Project A also has attractive performance.
O Project B is preferable and Project A results in a net loss.
O Project A is preferable and Project B results in a net loss.
$0.12
$0.12
Annual Cost
Escalation Rate
1.5%
1.5%
32. A factory has production capacity of P12,000
units per month with an efficiency of 80%
Fixed monthly operating cost = P600,000
Material and labor cost = P200/unit
Selling price = P500.00
Determine the monthly profit
Below are the costs and revenues of 2 alternatives for a machine. When the discount rate is 26.5% per year, determine which alternative is economically viable using the annual value method.
1. Machine
2. Machine
Initial investment expense
$1,400,000
$1,170,000
Scrap price
$280,000
$175,500
First year value of annual operating expense
$60,000
$28,000
Annual increase rate of operating expenses
%23
%26
Annual revenue
$720,000
$630,000
Annual revenue change
8 years fixed, then descending linearly
7 years fixed, then geometricdecreasing
Annual reduction rate of revenues
or quantity
$3,500
-%6
Economic Life
20 years
15 years
Below are the costs and revenues of 2 alternatives for a machine. When the discount rate is26.5%per year, determine which alternative is economically viable using the annual value
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
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