Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 12, Problem 24P
To determine
Calculate the time period.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Miguel is trying to decide whether or not to replace the windows on his house. Miguel estimates that installing new windows
would cost $11,000 and would save him $2,000 per year in energy costs. Assume a MARR of 10% and a useful life of 10 years.
Compute the AW of this decision.
Carry all interim calculations to 5 decimal places and then round your final answer to a whole number. The tolerance is
±10.
A new investment is estimated to more likely generate a uniform annual revenue of $560,000 for the next 10 years of service life. However, the investors think that there is a possibility that the annual revenue could be
as high as $870,000 or as low $310,000.
Calculate the expected annual revenue using the three-point estimation method,
OA $570,000
OB. $445,000
OC. $500,000
OD. $725,000
T
Chemitronix Ltd. is a microchips manufacturing company. It was found that the business is at the maturity stage, demanding some change. After rigorous research, management came up with the following decision variables.Expansion: 45% chance of gaining 1,500,00; 55% chance of losing XNew Product: 50% chance of gaining 900,000; 50% chance of losing 539740What must have been the value of expansion loss if expansion and new product will result to the same expected monetary values?
Chapter 12 Solutions
Engineering Economy (17th Edition)
Ch. 12 - Prob. 1PCh. 12 - Prob. 2PCh. 12 - A new snow making machine utilizes technology that...Ch. 12 - Prob. 4PCh. 12 - Prob. 5PCh. 12 - Prob. 6PCh. 12 - Prob. 7PCh. 12 - Prob. 8PCh. 12 - Prob. 9PCh. 12 - Prob. 10P
Ch. 12 - Prob. 11PCh. 12 - Prob. 12PCh. 12 - Prob. 13PCh. 12 - Prob. 14PCh. 12 - Prob. 15PCh. 12 - Prob. 16PCh. 12 - Prob. 17PCh. 12 - Prob. 18PCh. 12 - Prob. 19PCh. 12 - Prob. 20PCh. 12 - Prob. 21PCh. 12 - Prob. 22PCh. 12 - If the interest rate is 8% per year, what decision...Ch. 12 - Prob. 24PCh. 12 - Prob. 25PCh. 12 - Prob. 26SE
Knowledge Booster
Similar questions
- A manufacturing firm is considering a project which has an economic service life of one year with no salvage value. The initial cost for the project is $2,500. There is a 0.18 probability that the year-end revenue is $2,280. There is a 0.62 probability that the year-end revenue is $3,910. There is a 0.2 probability that the year-end revenue is $4,730. If the firm's MARR is 14%, what is the variance of the project?arrow_forwardYou are requested to pick an implementation technology for your embedded product to maximize the profit. You have a competitor that will release a similar product 25 weeks from today. If the maximum expected product lifetime in the market is 50 weeks and the projected maximum number of sold units/week by the market leader is 1M units. Assume that the price is constant throughout the product lifetime ($50 USD). 'The available implementation technologies are: T1 T2 T3 NRE cost Unit cost (material and manufacturing) 100 USD Time to market 100K USD 1M USD 10M USD 5 USD 40 weeks 25 USD | 20 weeks 30 weeks a) What is the maximum revenue that might be generated for this product? b) Assuming no competition and ignoring the given max number of sold units/week, what is the max number of units sold per week to achieve the same profit from T1 and T3? Assume no competition. c) With the competition, what is the maximum profit that might be achieved if you go with T1? d) With the competition, what is…arrow_forwardA project has a life of 10 years and no salvage value. Your firm uses an MARR of 8% to evaluate projects. The project has uncertain costs and revenue as shown in the table below: Initial Cost Probability Net Revenue Probability $120,000 0.25 $33,000 0.15 $240,000 0.60 $44,000 0.55 $300,000 0.15 $52,000 0.30 Determine the EUAW for the combination of inital cost and revenue with the highest probability of occurence. Express your answer in $ to the nearest $100. Answer is 8233.0 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
- A company has a nationwide income from monthly sales data (rounded to the nearest $100,000) shown below. Determine the expected value of the monthly income, if economic conditions remain the same. Income, S per Month 200,000 300,000 400,000 500,000 600,000 Number of Months 2 3 4 1arrow_forwardA company is planning to raise savings with associated probabilities shown in the table below. The useful life is 5 years with a probability of 0.6 and 3 years with probability of 0.4. Use a MARR of 10% a) Determine the joint probability distribution for savings per year and useful life. b) Determine the Expected Value of NPW if an initial Cost of $50,000 is required. Annual Benefit Probability $15.000 $20,000 $25,000 0.25 0.45 0.3arrow_forwardYour firm uses a continuous review system and operates52 weeks per year. One of the SKUs has the followingcharacteristics.Demand 1D2 = 20,000 units>yearOrdering cost 1S2 = $40>orderHolding cost 1H2 = $2>unit>yearLead time 1L2 = 2 weeksCycle@service level = 95 percentDemand is normally distributed, with a standard deviation ofweekly demand of 100 units.Current on-hand inventory is 1,040 units, with no scheduledreceipts and no backorders.a. Calculate the item’s EOQ. What is the average time, inweeks, between orders?b. Find the safety stock and reorder point that provide a95 percent cycle-service level c. For these policies, what are the annual costs of (i) holdingthe cycle inventory and (ii) placing orders?d. A withdrawal of 15 units just occurred. Is it time to reor-der? If so, how much should be ordered?arrow_forward
- Chemitronix Ltd. is a microchips manufacturing company. It was found that the business is at the maturity stage, demanding some change. After rigorous research, management came up with the following decision variables Expansion: 45% chance of gaining 1,500,000; 55% chance of losing X New Product: 50% chance of gaining 900,000; 50% chance of losing 576354 What must have been the value of expansion loss if expansion and new product will result to the same expected monetary values?arrow_forwardSunshine Smoothies Company (SSC) manufactures and distributes smoothies. It is considering the "weight loss" smoothies project. The project would require a $4 million investment outlay today The after-tax cash flows would depend on consumers’ demand. There is a 30% chance that demand will be good, and the project will produce after-tax cash flows of $2 million at the end of each year for the next 3 years. There is a 70% chance that demand will be poor, and the project will produce after-tax cash flows of $1 million at the end of each year for the next 3 years. The project is riskier than the firm's other projects, so it has a WACC of 12%. - The firm will know whether the project is success or not after receiving first year's cash flows from normal operating.. - After receiving the first year's cash flows (no matter what receive $1M or $2M in the first year), the firm will have the option to abandon the project. - If the firm decides to abandon the project, the company will no longer…arrow_forwardA project has a life of 10 years and no salvage value. Your firm uses an MARR of 8% to evaluate projects. The project has uncertain costs and revenue as shown in the table below: Net Initial Cost Probability Probability Revenue $110,000 0.25 $30,000 0.15 $240,000 0.60 $44,000 0.55 $330,000 0.15 $54,000 0.30 Determine the risk for the project expressed as the standard deviation of the expected value of the EUAW. Express your answer in $ to the nearest $100.arrow_forward
- A company is planning to raise savings with associated probabilities shown in the table below. The useful life is 5 years with a probability of 0.6 and 3 years with probability of 0.4. Use a MARR of 10% 1. Determine the joint probability distribution for savings per year and useful life. 2. Determine the Expected Value of NPW i an initial Cost of $50,000 is required. Annual Benefit $15.000 Probability 0.25 $20,000 0.45 $25,000 0.3arrow_forwardPlease show work on Excel. A new engineer is evaluating whether to use a larger diameter pipe for a water line. The pipe will cost $327,089 more initially but will reduce pumping costs. The optimistic, most likely, and pessimistic projections for annual savings are $30,000, $20,000, and $5000, with respective probabilities of 20%, 50%, and 30%. The interest rate is most likely to be 7%, but is equally likely to be 6% or 8%, and the water line should have a life of 40 years. Find the expected annual savings and the expected interest rate. Determine the Expected PW based on these. Hint: Based on the different saving and their probabilities, find the expected value of savings. Then find the expected value of the interest rate (each option has equal probability). Then find the PW using these values.arrow_forwardDECISION TREE APPLIED TO PRODUCT DESIGN Silicon, Inc., a semiconductor manufacturer, is investigating the possibility of producing and market-ing a microprocessor. Undertaking this project will require either purchasing a sophisticated CAD system or hiring and training several additional engineers. The market for the product could be eitherfavorable or unfavorable. Silicon, Inc., of course, has the option of not developing the new productat all.With favorable acceptance by the market, sales would be 25,000 processors selling for $100 each. Withunfavorable acceptance, sales would be only 8,000 processors selling for $100 each. The cost of CADequipment is $500,000, but that of hiring and training three new engineers is only $375,000. However,manufacturing costs should drop from $50 each when manufacturing without CAD to $40 eachwhen manufacturing with CAD. The probability of favorable acceptance of the new microprocessor is .40; the probability of unfa-vorable acceptance is .60.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education