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 29FE
To determine
Calculated the benefit cost ratio.
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The following estimates (in $1000 units) have been developed for a new cybersecurity
system at Chicago's O'Hare Airport. Calculate the conventional B/C ratio at a discount
rate of 10% per year.
First cost, $
AW of benefits, $ per year
FW (in year 20) of
disbenefits, $
M&O costs, $ per year
Expected life, years
O 1.21
<1.15
1.52
O 1.91
DOCUMENT.pdf
13,000
3,800
6,750
400
20
Consider a piece of equipment that has the following cost and benefit estimates, and the interest rate is 15% per year:
Initial investment: $200,000
Equipment life: 10 years
Salvage value: $10,000
Annual receipts: $100,000
Annual expenses: $50,000
What is the modified B/C ratio of this equipment?
Click the icon to view the interest and annuity table for discrete compounding when = 15% per year.
Thr modified cost-benefit ratio is
(Round to two decimal places.)
According to the B-C ratio method, the project is
More Info
Single Payment
Compound
Amount
Present
Factor
Worth Factor
To Find F
To Find P
Discrete Compounding; /= 15%
Compound
Amount
Factor
To Find F
Uniform Series
Sinking
Present
Capital
Recovery
Worth Factor
To Find P
Fund
Factor
To Find A
Factor
To Find A
Given P
Given F
Given A
Given A
Given F
Given P
N
FIP
P/F
F/A
PIA
A/F
A/P
1
1.1500
0.8696
1.0000
0.8696
1.0000
1.1500
2
1.3225
0.7561
2.1500
1.6257
0.4651
0.6151
3
1.5209
0.6575
3.4725
2.2832
0.2880
0.4380
4
1.7490
0.5718…
The benefits associated with a nuclear power plant cooling water filtration project located on the Ohio River are $12,000 per year
forever, starting in year 1. The costs are $25,000 in year O and $25,000 at the end of year 2. At /= 10% per year, calculate the B/C ratio
to determine if the project is justified economically.
The B/C ratio will be [
The project is economically [justifed
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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- 5,6,7 search Saved Help S GEarrow_forwardThe modified B/C ratio for a city-owned hospital heliport project is 1.7. The initial cost is $0.6 million, annual benefits are $150,000, and the estimated life is 29 years. What is the amount of the annual M&O costs used in the calculation at a discount rate of 6% per year? The annual M&O costs is $ .arrow_forwardA manager wants to compare between two alternatives by the B/C method; if the overall B/C ratio for both alternatives is calculated to be exactly 1.0, which alternative should the manager select? Select one: a. do nothing alternative b. Select both alternatives c. Select the alternative that has the higher cost d. Select the alternative based on the probability to occurarrow_forward
- A PAM partner company won a tender to provide clean water distribution facilities in an area that is being developed as a tourist area. There are 2 alternatives that can be taken in implementing the project. The first alternative requires construction and installation costs of IDR 10 million per kilometer with maintenance costs of IDR 0.35 million per kilometer per year. The remaining value is estimated at IDR 1 million per kilometer at the end of the 20th year. The second alternative requires construction and installation costs of IDR 7 million per kilometer with maintenance costs of IDR 0.40 million per kilometer per year. The remaining value is estimated at IDR 1.2 million per kilometer at the end of the 20th year. If the company chooses the first alternative, the length of the pipe that must be installed is 10 kilometers, and if the second alternative the length of the cable is 16 kilometers. Determine which alternative is more efficient using MARR = 11%!arrow_forwardUse AW method to calculate the benefit/cost ratio at i = 6% for a new library. The first cost is $500K, and O&M costs are $100K per year. There is no salvage value after 30 years. Community benefits are estimated to be $130K per year. Is the library economically justified? Write a brief interpretation of your answer. Determine the number of souvenir coins that must be sold per year to justify the purchase of a $6000 stamping machine. Each coin will be sold for $5.00 with a variable cost of $1.50. The machine will have little or no salvage value at the end of its 4-year useful life. Use an interest rate of 8%. What happens to the BEP if the variable cost increases to $2 per unit?arrow_forwardCalculate the B/C ratio (modified) of a building that houses students during their classroom discussion. Theaccommodation equates to P525,000 annually. However, the annual maintenance is P135,000. Its constructioncosts for about 2.3 M. If sold 20 years from its first operating year, it will amount to P250,000. Take MARR = 15% Please solve using economics formula.arrow_forward
- DRAW THE CASH FLOW DIAGRAM Two alternatives are being considered for a certain project. Alternative A has an initial cost of $10,000, uniform annual benefits of $3,000 and a useful life of 6 years. Alternative B has an initial cost of $20,000, uniform annual benefits of $5,000 and a useful life of 6 years. If money is worth 12% annually, determine the better alternative using modified B/C analysis.arrow_forwardSix sites have been identified for a parking lot in downtown Blacksburg. Because the sites are plots of land, their salvage value and investment cost are identical. A 10-year study period has been specified, and the MARR is 19% per year. Which site should be chosen based on the IRR criterion? Click the icon to view the alternatives description.arrow_forwardA shopping center is to be built in one of four different cities. The cash flow estimates associated with each alternative are given below. You will be using the conventional B/C ratio method to determine which city should be selected at an interest rate of 15% per year. One alternative must be selected. The following table shows the details of each alternative. Alternative Benefits, s/year Disbenefits, $/year ERR City1 95 12 8 170 City2 Life, years First cost, $ M&O costs, $/year Please find the following - B/C of City1 ✓ Incremental B/C of City1 vs. City3 30 110 55 12 210 30 City3 90 12 8 160 30 City4 105 15 10 180 25 Based on the incremental B/C analysis applied to all four cities, choose one city among the four cities. A. 1.22 B. City3 C. 0.00 D. City2 E. 2.50 F. 1.00 G.1.19 H.City4 1. City1 J. 2.24 K. 1.48arrow_forward
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