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 31FE
To determine
Calculated the Incremental benefit cost ratio.
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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.
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 therobotics used on the heavy truck gear line will produce total benefits of $516,000 (in today's dollars) over the next 5 years. The existing robotics would produce benefits of $387,000 (also in today's dollars) over that same timeperiod. An initial cash investment of $206,400 would be required to install the new equipment. The manager estimates that the existing robotics can be sold for $72,000. Show how Ken will apply marginal cost-benefit analysistechniques to determine the following:a. The marginal benefits of the proposed new robotics.b. The marginal cost of the proposed new roboticsc. The net benefit of the proposed new robotics.
A gold mining area in Lanao contains on average, 1 ounce of gold per
ton. Two methods of processing are available; method A costs P1.5M
per ton and recovers 90% of gold; method B costs P1.3M per ton and
recovers 80% of the gold. If gold can be sold for P2.4M per ounce , which
method is better and by how much?
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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