Basics Of Engineering Economy
2nd Edition
ISBN: 9780073376356
Author: Leland Blank, Anthony Tarquin
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 13P
a:
To determine
Selection of the project.
b:
To determine
Calculate the annual worth through calculator.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
An effective method to recover water used for regeneration of ion exchange resins
is to use a reverse osmosis system in a batch treatment mode. Such a system involves recirculation
of the partially treated water back into the feed tank, causing the water to heat up. The water can
be cooled using one of two systems: a single-pass heat exchanger or a closed-loop heat exchange
system.
The single-pass system, good for 4 years, requires a small chiller costing $900 plus stainless steel
tubing, connectors, valves, etc. costing $600. The cost of water, treatment charges, electricity, etc.
will be $5 per hour.
The closed-loop system will cost $4, 000 to buy, will have a useful life of 6 years, and will cost $2
per hour to operate. An overhaul cost of $200 is incurred in the first year and this cost is increased
by 5% every year.
What is the minimum number of hours per year that the cooling system must be used in order
to justify purchase of the closed-loop system? The interest rate…
An engineer has recently purchased a new piece of equipment to use in analyzing geological formations. The equipment has no maintenance costs the first year due to a one year's free maintenance warranty. In the second year, it is expected to cost $20 to maintain the equipment and in subsequent years the cost of maintenance will increase by $20 per year (i.e. maintenance cost is $40 in year three, $60 in year four, and so on). Approximately what amount must be set aside now at 7% interest to pay the cost of maintaining the equipment over the first six years of ownership?
A large textile company is trying to decide which sludge dewatering process it should use ahead of its sludge drying operation. The costs associated with centrifuge and belt press systems are shown. Compare them on the basis of their annual worths using an interest rate of 10% per year.
System
Centrifuge
Belt Press
First cost, $
−235,000
−150,000
AOC, $/year
−48,000
−41,000
Overhaul in year 2, $
--
−26,000
Salvage value, $
40,000
10,000
Life, years
6
4
The annual worth of the centrifuge system is $− , and the annual worth of the belt press system is $− .
The system selected on the basis of the annual worth analysis is the (Click to select) belt press centrifuge system.
Chapter 5 Solutions
Basics Of Engineering Economy
Ch. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10P
Ch. 5 - Two machines with the following cost estimates are...Ch. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Estimates have been presented to Holly Farms,...Ch. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - A major repair on the suspension system of Janes...Ch. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32APQCh. 5 - Prob. 33APQCh. 5 - Prob. 34APQCh. 5 - Prob. 35APQCh. 5 - Prob. 36APQCh. 5 - The AW values of three revenue alternatives are ...Ch. 5 - Prob. 38APQCh. 5 - Prob. 39APQCh. 5 - Use an interest rate of 10% per year. The...Ch. 5 - Prob. 41APQCh. 5 - Prob. 42APQ
Knowledge Booster
Similar questions
- The price of a car you want is $42,000 today. Its price is expected to increase by $1000 each year. You now have $25,000 in an investment account, which is earning 10% per year. How many years will it be before you have enough to buy the car without borrowing any money? Solve by (a) trial and error, and (b) by spreadsheet.arrow_forwardAn engineer is trying to decide which process to use to reduce sludge volume prior to disposal. Belt filter presses (BFP) will cost $203,000 to buy and $85,000 per year to operate. Belts will be replaced one time per year at a cost of $5500. Centrifuges (Cent) will cost $396,000 to buy and $119,000 per year to operate, but because the centrifuge will produce a thicker “cake”, the sludge hauling cost to the monofill will be $37,000 per year less than for the belt presses. The useful lives are 5 and 10 years for alternatives BFP and Cent, respectively, and the salvage values are assumed to be 10% of the first cost of each process whenever they are closed down or replaced. Use PW evaluation to select the more economical process at an interest rate of 6% per year over (a) the LCM of lives, and (b) a study period of 8 years. Are the decisions the same?arrow_forwardEcology group wishes to purchase a piece of equipment for recycling of various metals. Machine 1 costs $300000, has a tife of 10 years, an annual cost of $30000, and requires one operator at a cost of $72 per hour. It can process 10 tons per hour. Machine 2 costs $180000, has a life of 6 years, an annual cost of $15000, and requires two operators at a cost of $72 per hour each to process 6 tons per hour. Determine the annual breakeven tonnage of scrap metal at i=10% per year.arrow_forward
- Accusoft Systems is offering small business owners a software package that keeps track of many accounting functions from bank transactions to sales invoices. The site license will cost $55,000 to install and will require a fee of $2500 every 3 months. If your company can save $13,500 every quarter and have the security of managing its books in-house, how long will it take for you to recover the investment at an interest rate of 8% per quarter? The time taken to recover the investment is determined to be _______ quarters.arrow_forwardYour friend is considering a new exhaust system for his Lamborghini Diablo. The estimates from the two shops are shown in the following table. Besides installation, shop Y includes a full replacement warranty for 4 years in the quote. Since money does not appear to be a problem for your friend, and he asked you about the economics of the two quotes, which should he choose based on annual worth values and an interest rate of 12% per year? Shop installed cost, $ Total AOC, $/year Salvage value, $ Life, years X -2,250 -1,200 125 Y -3,400 -900 900 4 The annual worth value of shop X is $- , and the annual worth value of shop Y is $- The shop that your friend has to select on the basis of the annual worth analysis is (Clic to select)arrow_forwardAn item with a holding cost of $400 per year can be shipped by air in 1 day, costing $250, or by ground in 5 days, costing $150. Assuming the holding costs of $400 per year are based on an operational year of 365 days, which is cheaper and by how much?arrow_forward
- A small company heats its building and spends $8,800 per year on natural gas for this purpose. Cost increases of natural gas are expected to be 9% per year starting one year from now (i.e., the first cash flow is $9,592 at EOY one). Their maintenance on the gas furnace is $355 per year, and this expense is expected to increase by 12% per year starting one year from now (i.e. the first cash flow for this expense is $397.60 at the EOY one). If the planning horizon is 14 years, what is the total annual equivalent expense for operating and maintaining the furnace? The interest rate is 15% per year. Click the icon to view the interest and annuity table for discrete compounding when /- 0% per year. Click the icon to view the interest and annuity table for discrete compounding when /-12% per year. Click the icon to view the interest and annuity table for discrete compounding when / 15% per year. CORD The total annual equivalent expense for operating and maintaining the fumace is $thousands…arrow_forwardYou have been asked to choose between two office equipment, which will be needed for 12 years of operation. Equipment A will last 6 years, whereas equipment B will last 12 years. Equipment A costs $9500, has annual costs of $1200, and no salvage value, and should be replaced with an identical equipment at the end of its life. Equipment B costs $15,000, has annual costs of $900, and no salvage value. Perform the incremental rate of return analysis and highlight ΔΔIIR in yellow. Assume MARR = 8%. ( Use Excel to solve )arrow_forward← An oil refinery finds that it is necessary to treat the waste liquids from a new process before discharging them into a stream. The treatment will cost $40,000 the first year, but process improvements will allow the costs to decline by $4,000 each year. As an alternative, an outside company will process the wastes for the fixed price of $20,000/year throughout the 8 year period, payable at the beginning of each year. Either way, there is no need to treat the wastes after 8 years. Use the annual worth method to determine how the wastes should be processed. The company's MARR is 13%. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 13% per year. wwwarrow_forward
- A small company heats its building and spends $8,000 per year on natural gas for this purpose. Cost increases of natural gas are expected to be 10% per year starting one year from now (i.e., the first cash flow is $8,800 at EOY one). Their maintenance on the gas furnace is $345 per year, and this expense is expected to increase by 15% per year starting one year from now (i.e., the first cash flow for this expense is $396.75 at the EOY one). If the planning horizon is 15 years, what is the total annual equivalent expense for operating and maintaining the furnace? The interest rate is 18% per year. Click the loon to view the interest and annuity table for discrete compounding when/= 10% per year. Click the icon to view the interest and annuity table for discrete compounding when /= 15% per year. Click the icon to view the interest and annuity table for discrete compounding when /= 18% per year. The total annual equivalent expense for operating and maintaining the furnace is $ thousands.…arrow_forwardQUESTION 8 A professional photographer who specializes in wedding-related activities paid $46,500 for equipment that will have a $2000 salvage value after 5 years. He estimates that his costs associated with each event amount to $65 per day. If he charges $200 per day for his services, how many days per year must he be employed in order to break even at an interest rate of 8% per year? The number of days required for break even, (in days per year) Round to the nearest three (3) decimal placesarrow_forwardThe Department of Energy is proposing new rules mandating either a 20% increase or a 35% increase in clothes washer efficiency in 3 years. The 20% increase is expected to add $100 to the current price of a washer, while the 35% increase will add $240 to the price. If the cost for energy is $80 per year with the 20% increase in efficiency and $65 per year with the 35% increase, which one of the two proposed standards is more economical on the basis of a future worth analysis at an interest rate of 10% per year? Assume a 15-year life for all washer models.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education