Basics Of Engineering Economy
Basics Of Engineering Economy
2nd Edition
ISBN: 9780073376356
Author: Leland Blank, Anthony Tarquin
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 3, Problem 46P
To determine

Calculate the present worth.

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Electric car maker Gentech signed a $75 million contract with Power Systems, Inc. to automate a major part of its assembly line system. If Power Systems will be paid 2 years from now, when the systems are ready, determine the present worth of the contract at 18% per year interest.
Southwest airlines hedged the cost of jet fuel by purchasing options that allowed the airline to purchase fuel at a fixed price for 5 years. If the market price of fuel was $0.50 per gallon higher than the option price in year 1, $0.60 per gallon in year 2, and amounts increased by $0.10 per gallon higher through year 5, what was the present worth of SWA's savings per gallon if the interest rate was  10% per year? Draw a diagram and complete the solution.
The optical products division of LG planning a $3 million building expansion for manufacturing its powerful Lumix DMC digital zoom camera. if the company uses an interest rate of 10% per year, compounded quarterly for all new investments, what is the uniform amount per quarter the company must make in order to recover its investment in 4 years?

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Basics Of Engineering Economy

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