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 4, Problem 17P
To determine

Calculate the present worth.

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ENGINEERING ECONOMY RATE WILL BE GIVEN. WRITE THE COMPLETE SOLUTIONS/EXPLANATION LEGIBLY OR TYPEWRITTEN. GIVE STRAIGHT TO THE POINT EXPLANATION. Two alternative designs are under consideration for a tapered fastening pin. The fastening pins are sold for $0.70 each. Either design will serve equally well and will involve the same material and manufacturing cost except for the lathe and drill operations. Design A will require 12 hours of lathe time and 5 hours of drill time per 1,000 units. Design B will require 7 hours of lathe time and 8 hours of drill time per 1,000 units. The variable operating cost of the lathe, including labor, is $18.60 per hour. The variable operating cost of the drill, including labor, is $16.90 per hour. Finally, there is a sunk cost of $5,000 for Design A and $9,000 for Design B due to obsolete tooling. a. Which design should be adopted if 125,000 units are sold each year?b. What is the annual saving over the other design?
Oregon Ducks, Inc. is considering buying licenses for 12 megahertz of wireless spectrum in the 700 MHz range, which is suitable for delivering television to mobile phones. The 700 MHz signals can travel long distances and more easily penetrate walls and other obstacles. The acquisition cost is $300 million. In addition, because networks that operate in the 700 MHz range are less expensive to build than those in other portions of the spectrum, Ducks estimates annual costs of $24 million over the next 9 years and no salvage value. During the same period, the company expects to generate annual revenue of $40 million by offering television and video to mobile-phone users. Calculate the net present worth of this investment if the company's minimum attractive rate of return (discount rate) is 13% per year.
For a motor to operate a pump, a design engineer must choose the horsepower. Horsepower rating is a design characteristic that can vary from 10 to 40 horsepower. The motor will cost $120 per year to operate, plus $0.60 per horsepower. The running expenses of such motors will be $0.055 per horsepower-hour divided by the horsepower rating. Each year, 9,000 horsepower-hours will be required.   Determine how much horsepower should be supplied to keep the overall yearly cost to a minimal. Demonstrate that your entire cost each year has been reduced.

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Basics Of Engineering Economy

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