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 9P
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A certain medical device will result in an estimated $15,000 reduction in hospital labor expenses during its first year of operation. Labor expenses (and thus savings) are projected to increase at a rate of 7% per year after the first year. Additional operating expenses for the device (maintenance, electric power, etc.) are $3,500 annually, and they increase by $250 per year thereafter (i.e., $3,750 in year two and so on). It is anticipated that the device will last for 10 years and will have no market value at that time. If the MARR is 10% per year, how much can the hospital afford to pay for this device? Use an Excel spreadsheet in your solution.
At the beginning of Year 1 Timmy purchased a 200-acre farm in Oldham County, Texas. He immediately proceeded to begin growing crops for sale. He irrigates his crops using water from the Ogallala formation.   At the time of purchase, Timmy was advised by a qualified hydrologist that there were approximately 200,000,000 cubic meters of recoverable Ogallala water under his farm. On the basis of this report Timmy, on your advice, allocated $6 million of his $20 million purchase price to the water.   At the very beginning of Year 2 the hydrologist came back and estimated that as of that time there remained 194,000,000 cubic meters of recoverable water under Timmy’s farm. Calculate and explain Timmy’s Year 1 cost depletion deduction.   ReplyForward
The following cash flows result from a potential construction project for your company: 1. Receipts of $505,000 at the start of the contract and $1,200,000 at the end of the fourth year 2. Expenditures at the end of the first year of $400,000 and at the end of the second year of $900,000 3. A net cash flow of $0 at the end of the third year. Using an appropriate rate of return method (Approximate ERR), for a MARR of 20%, should your company accept this project (Perform all calculations using 5 significant figures and round your answer to one decimal place. Also remember that text answers are case-sensitive):? Answers entered using text are case sensitive! What is the approximate ERR for this project? Number Should your company undertake this project? (Enter either 'Yes' or 'No'): %

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Basics Of Engineering Economy

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