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 11, Problem 15P
To determine
Sensitivity analysis with
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An industrial machine costing $10,000 will produce net cash
savings of $4,000 per year. The machine has a five-year useful life
but must be returned to the factory for major repairs after three
years of operation. These repairs cost $5,000. The company's
MARR is 10% per year. What IRR will be earned on the purchase
of this machine? Analyze the sensitivity of IRR to $2,000
changes in the repair cost.
Perform the sensitivity analysis. Fill-in the table below. (Round to
one decimal place.)
Change in
the repair cost
- $2,000
$0
IRR
21.05%
%
Is the project
acceptable?
Yes
An industrial machine costing $10,000 will produce net cash savings of $4,000 per year. The machine has a five-year useful life but must be returned to the factory for major repairs after three years of operation. These repairs cost $5,000. The
company's MARR is 10% per year. What IRR will be earned on the purchase of this machine? Analyze the sensitivity of IRR to ±$2,000 changes in the repair cost.
Perform the sensitivity analysis. Fill-in the table below. (Round to one decimal place.)
Change in
the repair cost
Is the project
acceptable?
IR
- $2,000
An engineer has recently purchased a new piece of equipmenato use in analyzing geological formations. The equipment has no maintenance
costs the first year due to a one year's free maintenance warranty. In the second year, it is expected to cost $20 to maintain the equipment
and in subsequent years the cost of maintenance will increase by $20 per year (i.e. maintenance cost is $40 in year three, $60 in year four,
and so on). Approximately what amount must be set aside now at 6% interest to pay the cost of maintaining the equipment over the first six
years of ownership?
$289
$206
$254
$229
Chapter 11 Solutions
Engineering Economy (17th Edition)
Ch. 11 - Prob. 1PCh. 11 - Refer to Example 11-2. Assuming gasoline costs...Ch. 11 - Prob. 3PCh. 11 - Prob. 4PCh. 11 - Prob. 5PCh. 11 - Prob. 6PCh. 11 - Prob. 7PCh. 11 - Prob. 8PCh. 11 - Prob. 9PCh. 11 - Prob. 10P
Ch. 11 - Prob. 11PCh. 11 - Prob. 12PCh. 11 - Prob. 13PCh. 11 - Prob. 14PCh. 11 - Prob. 15PCh. 11 - Prob. 16PCh. 11 - Prob. 17PCh. 11 - Prob. 18PCh. 11 - Prob. 19PCh. 11 - A bridge is to be constructed now as part of a new...Ch. 11 - An aerodynamic three-wheeled automobile (the Dart)...Ch. 11 - Prob. 23PCh. 11 - Prob. 24SECh. 11 - Prob. 25SECh. 11 - Prob. 26SECh. 11 - Prob. 27SECh. 11 - Prob. 28SECh. 11 - Prob. 29SECh. 11 - Prob. 30FECh. 11 - Prob. 31FECh. 11 - A supermarket chain buys loaves of bread from its...Ch. 11 - A supermarket chain buys loaves of bread from its...Ch. 11 - Prob. 34FECh. 11 - Prob. 35FECh. 11 - Prob. 36FECh. 11 - Prob. 37FECh. 11 - Prob. 38FECh. 11 - Prob. 39FECh. 11 - Prob. 40FECh. 11 - Prob. 41FECh. 11 - Prob. 42FE
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