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 71APQ
To determine
Correct equation.
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Dexcon Technologies, Inc., is evaluating two alternatives to produce its new plastic filament with low friction properties for creating custom bearings for 3-D printers.
The estimates associated with each alternative are shown below. Using a MARR of 16% per year, which alternative has the better present worth and what is that
value (select the closest value)?
Method
First Cost
AOC, per Year
Salvage Value
Life
DDM
$170,000
$65,000
$4,000
2 years
LS
$350,000
$40,000
$29,000
4 years
DDM with a PW--$473,000
LS with a PW --$445,900
LS with a PW --$222,055
DDM with a PW--$109,300
Potable water is in short supply in many countries. To address this need, two mutually exclusive water purification systems are being considered for implementation in China. Doing nothing is not an option. Refer to the data below and state your key assumptions in working this problem. Solve, a. Use thePWmethod to determine which system should be selected when MARR = 8% per year. b. Which system should be selected whenMARR = 15% per year?
The following five alternatives that are evaluated by the rate of return method, If the alternatives are independent and the MARR is 15% per year, the onels) to select is (are)
Incremental ROR, N.
When Compared with
Alternative
Initial
Investment,S
Alternative
Alternative
A BC DE
10.6
27.3
194
353 25.0
-25,000
-35,000
13.1
38.5
24.4
-40,000
13.4
46.5
27.3
26.8
-60,000
25.4
-75,000
20.2
Only D
O Only D and E
O Only A D, and E
O Only E
Chapter 4 Solutions
Basics Of Engineering Economy
Ch. 4 - State two conditions under which the do-nothing...Ch. 4 - Prob. 2PCh. 4 - Prob. 3PCh. 4 - Prob. 4PCh. 4 - Prob. 5PCh. 4 - Prob. 6PCh. 4 - Prob. 7PCh. 4 - Prob. 8PCh. 4 - Prob. 9PCh. 4 - The costs associated with manufacturing a...
Ch. 4 - Prob. 11PCh. 4 - Prob. 12PCh. 4 - Prob. 13PCh. 4 - Prob. 14PCh. 4 - Prob. 15PCh. 4 - Prob. 16PCh. 4 - Prob. 17PCh. 4 - Prob. 18PCh. 4 - Prob. 19PCh. 4 - Prob. 20PCh. 4 - Prob. 21PCh. 4 - Prob. 22PCh. 4 - Prob. 23PCh. 4 - Prob. 24PCh. 4 - Prob. 25PCh. 4 - Prob. 26PCh. 4 - Prob. 27PCh. 4 - Prob. 28PCh. 4 - Prob. 29PCh. 4 - Prob. 30PCh. 4 - Prob. 31PCh. 4 - Two mutually exclusive projects have the estimated...Ch. 4 - Prob. 33PCh. 4 - Prob. 34PCh. 4 - Prob. 35PCh. 4 - Prob. 36PCh. 4 - Prob. 37PCh. 4 - The manager of engineering at the 900-megawatt...Ch. 4 - Prob. 39PCh. 4 - Prob. 40PCh. 4 - Prob. 41PCh. 4 - Three different plans were presented to the GAO by...Ch. 4 - The U.S. Army received two proposals for a turnkey...Ch. 4 - Prob. 44PCh. 4 - Prob. 45PCh. 4 - Prob. 46PCh. 4 - Prob. 47PCh. 4 - Prob. 48PCh. 4 - Prob. 49PCh. 4 - Prob. 50PCh. 4 - Prob. 51PCh. 4 - Prob. 52PCh. 4 - Prob. 53PCh. 4 - Prob. 54PCh. 4 - Prob. 55PCh. 4 - Prob. 56PCh. 4 - Prob. 57PCh. 4 - Prob. 58PCh. 4 - Prob. 59PCh. 4 - Prob. 60PCh. 4 - Prob. 61PCh. 4 - Prob. 62PCh. 4 - Prob. 63APQCh. 4 - Prob. 64APQCh. 4 - Prob. 65APQCh. 4 - Prob. 66APQCh. 4 - Prob. 67APQCh. 4 - Prob. 68APQCh. 4 - Prob. 69APQCh. 4 - Prob. 70APQCh. 4 - Prob. 71APQ
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- A cost-saving device has no salvage value after 5 years. Two options: Device A: Costs $10,000 & saves $3000 annually Device B: Costs $13,500 & saves $3000 the 1st year & increases $500 annually Which alternative should be selected using incremental ROR analysis, MARR=7%?arrow_forwardPresent Worth and Capitalized CostA restaurant owner is trying to decide between two different garbage disposals. A regular steel (RS) disposal has an initial cost of P3500, a life of 4 years and a maintenance cost of P100 at the end of the second year. The alternative is a corrosion-resistant disposal constructed primarily of stainless steel (SS). The initial cost of SS disposal is P6000, but it is expected to last for 6 years. Because the SS disposal has a slightly larger motor, it is expected to cost about P200 per year to operate. The salvage value of SS disposal is expected to be P500 at the end of 6 years. If the interest rate is 15% per year compounded quarterly. (a.) Draw the cash flow diagram. (b.) Which disposal should be selected?arrow_forwardA company that manufactures brushless blowers invested $700,000 in an automated quality control system for blower housings. The resultant savings was $180,000 per year for 5 years. If the equipment had a salvage value of $100,000, what rate of return per year did the company make and should the company invest in the blower if MARR is 10%? 7.31% per year (invest in the blower) None of the above 7.31% per year (do not invest in the blower) 12.30% per year (invest in the blower) 12.30% per year (do not invest in the blower)arrow_forward
- Two methods can be used for producing expansion anchors. Method A costs $80,000 initially and will have a $15,000 salvage value after 3 years. The operating cost with this method will be $30,000 per year. Method B will have a first cost of $120,000, an operating cost of $8000 per year, and a $40,000 salvage value after its 3-year life. At the MARR of 12% per year, which method should be used on the basis of a present worth analysis?arrow_forwardDexcon Technologies, Inc. is evaluating two alternatives to produce its new plastic filament with tribological (i.e., low friction) properties for creating custom bearings for 3-D printers. The estimates associated with each alternative are shown below. Using a MARR of 20% per year, which alternative has the lower present worth? Method DDM LS First cost, $ ā164,000 ā370,000 M&O cost, $/year ā55,000 ā21,000 Salvage value, $ 0 30,000 Life, years 2 4arrow_forwardFor the two alternatives, demonstrate that the sum of the incremental cash flow series (Z ā X) over the LCM is equal to the difference in the sums of the individual cash flow series for X and Z. System X Z First cost, $ ā40,000 ā95,000 AOC, $ per year ā12,000 ā5,000 Salvage value, $ 6,000 14,000 Life, years 3 6arrow_forward
- Carlisle Company has been cited and must invest in equipment to reduce stack emissions or face EPA fines of $18,500 per year. An emission reduction filter will cost $75,000 and have an expected life of 5 years. Carlisleās MARR is 10 %/year.arrow_forwardABC Beverage, LLC, purchases its 355-ml cans in large bulk from Wald-China CanĀ Corporation. The finish on the anodized aluminum surface is produced byĀ mechanical finishing technologies called brushing or bead blasting. Engineers atĀ Wald are switching to more efficient, faster, and cheaper machines to supply ABC.Ā Use the estimates and MARR = 8% per year to select between the two alternatives. Ā Ā Brush Alternative Bead Blasting Alternative P $-400,000 $-400,000 n 6 years large Salvage Value $50,000 no valueĀ AOC Nonlabor $-60,000 in year 1, decreasing byĀ $2500 annuallyĀ starting in year 2 $-70,000 per yeararrow_forwardWHICH IS MORE ECONOMICAL? USE METHOD OF COMPARISON OF ALTERNATIVES! Ā In a cold storage plant, it is desired to determine whether to use insulation two inches thick or three inches thick in insulating the walls of the cold storage ware house. Heat absorb through the walls without insulation would cost P96.00 per year per squaremeter. A two-inch insulation will cost P30.40 per square meter and will cut out 89% of the loss. A three-inch insulation will cut out 92% of the loss and will cost P65.00 per square meter. Using a life 15 years for the insulation with no salvage value and a minimum attractive return of 8%, what thickness of insulation should be used?arrow_forward
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