Principles of Engineering Economic Analysis
Principles of Engineering Economic Analysis
6th Edition
ISBN: 9781118163832
Author: John A. White, Kenneth E. Case, David B. Pratt
Publisher: Wiley, John & Sons, Incorporated
Students have asked these similar questions
Elroy Harris is considering whether to buy a corn and soybean farm in Iowa. The farm will cost $800,000, and Xander will be able to pay this from profits his recently deceased mother made on the stock market and willed to him. He estimates that if he does not run the farm, and keeps his current job as an economic forecaster, he will be able to earn $40,000 a year. The prevailing interest rate is 9 percent. Xander’s only motive is to maximize his income. His accountant tells him the annual profit from the farm is likely to be depending on certain conditions and assuptions:   Scenario i) $160,000 of accounting profit Scenario ii) $100,000 of accounting profit Scenario iii) $50,000 of accounting profit Using the concept of positive economic profit, which of the three scenarios would the economic opportunity cost justify him taking up farming and quitting his job as an economic forecast. Show your work and calculations
What is the maximum amount you would pay for an asset that generates an income of P150,000 at the end of each of five years if the opportunity cost of using funds is 9 percent?
Joanne has just completed high school and is trying to determine whether to go to junior college for two years or go directly to work. Her objective is to maximize the savings she will have in the bank five years from now.   If she goes directly to work, she will earn $22,000 per year for each of the next five years. If she goes to junior college, for each of the next two years she will earn nothing—indeed, she will have to borrow $6,000 each year to cover tuition and books. This loan must be repaid in full three years after graduation. If she graduates from junior college, in each of the subsequent three years, her wages will be $41,000 per year. Joanne’s total living expenses and taxes, excluding tuition and books, equal $15,000 per year. Instructions:  Enter your responses as whole numbers. a.  Suppose, for simplicity, that Joanne can borrow and lend at 0 percent interest.  On purely economic grounds, should she go to junior college or work? After 5 years, the total value of…

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Principles of Engineering Economic Analysis

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