Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Question
Chapter 12, Problem 5P
To determine
Calculate the present worth.
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Consider the following cash flow diagram. The probability of the pessimistic value of N = 4 years is 0.30, the probability of the most likely value of N = 6 years is 0.50, and the probability of the optimistic value of N = 9 years is 0.2. What is the expected value of the present worth of this project when the interest rate is 8% per year?
A large company in the communication and publishing industry has quantified the relationship between the price of one of its products and the demand for this product as Price = 150−0.01 × Demand for an annual printing of this particular product. The fixed costs per year (i.e., per printing) = $50,000 and the variable cost per unit=$40. What is the maximum profit that can be achieved if the maximum expected demand is 6,000 units per year? What is the unit price at this point of optimal demand?
The tree diagram in figure below describes the uncertain cash flows for an engineering project. The analysis period is two years, and MARR = 12% per year. Based on this information,
a. What are the E(PW), V(PW), and SD(PW) of the project?
b. What is the probability that PW≥ 0?
Click the icon to view the tree diagram.
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year.
a. Calculate the E(PW), V(PW), and SD(PW) of the project.
E(PW) = $ (Round to the nearest dollar.)
More Info
0
-$29,000
0.2
0.6
0.2
Time Period
1
$5,500
$11,000
$17,500
0.1
0.1
0.8
0.1
0.7
0.2
0.2
0.3
0.5
2
$17,200
$20,200
$24,800
$20,100
$24,600
$29.300
$21,900
$28,000
$31,100
C
Q
- X
More Info
N
1
2
3
4
5
Discrete Compounding; i = 12%
Compound
Amount
Factor
To Find F
Given A
FIA
1.0000
2.1200
3.3744
4.7793
6.3528
Single Payment
Compound
Amount
Factor
To Find F
Given P
F/P
1.1200
1.2544
1.4049
1.5735
1.7623
Present
Worth Factor
To Find P
Given F
P/F
0.8929
0.7972…
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
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