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 15P
a:
To determine
Selection of the project.
b:
To determine
Calculate the present worth.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
An environmental engineer wants to evaluate three different methods for disposing of nonhazardous chemical waste: land application,
fluidized-bed incineration, and private disposal contract. Use the estimates below to help her determine which has the least cost at /=
13% per year on the basis of an annual worth evaluation.
First Cost
AOC per Year
Salvage Value
Life
Land
$-145.000
$-91,000
$23,000
4 years
Incineration
$-910,000
$-50,000
$310,000
6 years
The environmental engineer selects a✔(Click to select)
private disposal contract
land application
fluidized-bed incineration
Contract.
0
$-132,000
0
2 years
A chemical processing corporation is considering
three methods to dispose of a nonhazardous
chemical sludge: land application, fluidized-bed
incineration, and private disposal contract. The
estimates for each method are shown.
Determine which has the least cost on the basis of a
present worth comparison at 10% per year
for the following scenarios (You may assume a
planning horizon of 6 years.):
(a) The estimates are as shown in the table above.
b) If land application and incineration costs are as
shown in the table, but the annual cost of the
contract award cost increase by 20% every time the
contract is renewed (every 2 years).
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
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
- You have been asked to evaluate two alternatives, X and Y, that may increase plant capacity for manufacturing high-pressure hydraulic hoses. The parameters associated with each alternative have been estimated. Which one should be selected on the basis of a present worth comparison at an interest rate of 12% per year? Why is yours the correct choice? Alternative X Y First cost, $ −45,000 −58,000 Maintenance cost, $/year −8,000 −4,000 Salvage value, $ 2,000 12,000 Life, years 5 5arrow_forwardA chemical processing corporation is considering three methods to dispose of a non- hazardous chemical sludge: land application. Fluidized-bed incineration, and private disposal contract. The estimates for each method are shown. a) Determine which has the least cost on the basis of a present worth comparison at 10% per year for the following scenarios (You may assume a planning horizon of 6 years. The estimates are as shown the table b) If land application and incineration costs are as shown in the table, but the annual cost of the contract award cost increase br 20% everv time the contract is renewed (every 2 years) Use factors or formulasarrow_forwardAn irrigation return flow drain has sampling equipment that can be powered by solar cells or by running an electric line to the site and using conventional power. Solar cells will cost $14,000 to install with a useful life of 10 years. Annual costs for inspection, cleaning, etc. are expected to be $1500. A new power line will cost $12,000 to install and the power costs are estimated at $600 per year. The salvage value of the solar cells is expected to be 25% of the first cost when the sampling project ends in 4 years. The electric line will stay in place, so its salvage value is considered to be zero. At an interest rate of 10% per year, which alternative should be selected?arrow_forward
- Consider two air-conditioning systems with the estimates below. (a) Use AW analysis to determine the sensitivity of the economic decision to MARR values of 4%, 6%, and 8% per year. (b) Develop the spreadsheet functions that will display the six AW values. System 1 2 First cost, $ −10,000 −17,000 AOC, $ per year −600 −150 Salvage value, $ −100 −300 New compressor and motor cost at midlife, $ −1,750 −3,000 Life, years 8 12arrow_forwardEvaluate a combined cycle power plant on the basis of the PW method when the MARR is 12% per year. Pertinent cost data are as follows : Power Plant (thousands of $) Investment cost $13,000 Useful life 15 years Market value (EOY 15) $3,000 Annual operating expenses $1,000 Overhaul cost—end of 5th year $200 Overhaul cost—end of 10th year $550 USING FUTURE WORTH (FW)arrow_forwardFor the cash flows shown, determine the incremental cash flow between machines B and A (a) in year 0, (b) in year 3, and (c) in year 6. Machine A B First cost, $ −15,000 −25,000 AOC, $ per year −1,600 −400 Salvage value, $ 3,000 6,000 Life, years 3 6arrow_forward
- For the two alternatives, demonstrate that the sum of the incremental cash flow series (Z − 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, $ −40,000 −95,000 AOC, $ per year −12,000 −5,000 Salvage value, $ 6,000 14,000 Life, years 3 6arrow_forwardAn air sampling station can be powered by a solar cell or an electric line. At an interest rate of 10% per year, determine (a) Which alternative should be selected on the basis of an annual worth analysis? (b) what must be the first cost of the other alternative to be equally attractive economically?arrow_forwardA 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.arrow_forward
- If you have the capitalized cost of a certain alternative that has a 5-year life, you can get its annual worth by: (a) multiplying the CC by i (b) multiplying the CC by (A / F, i,5) (c) multiplying the CC by (P / A, i,5) (d) multiplying the CC by (A / P, i,5) (e) Any of the above darrow_forwardA chemical processing corporation is considering two methods to dispose of a non-hazardous chemical sludge: land application and fluidized-bed incineration. The estimates for each method are shown below. Use the Annual Worth (AW) method at interest 10% per year to select the better alternative Land Application Incineration First cost, $ - 130,000 - 900,000 Annual operating cost, $ - 95,000 - 60,000 Salvage value, $ 25,000 300,000 Life, years 3 10% TABLE 15 Discrete Cash Flow: Compound Interest Factors 10% Single Payments Uniform Serles Payments Arithmetic Gradients Compound Amount Present Sinking Fund Compound Amount Capital Recovery A/P Gradient Present Worth P/G Gradient Uniform Series A/G Present Worth Worth F/P P/F A/F F/A P/A 1.00000 1.0000 2.1000 1.10000 0.57619 0.40211 1.1000 0.9091 0.9091 0.8264 0.7513 2 1.2100 0.47619 1.7355 0.8264 0.4762 2.4869 2.3291 4.3781 6.8618 9.6842 1.3310 0.30211 3.3100 0.9366 1.3812 0.31547 0.26380 0.22961 0.20541 0.21547 4.6410 3.1699 0.6830 0.6209 4…arrow_forwardEvaluate a combined cycle power plant on the basis of the present worth method when the MARR is 12% per year. Pertinent cost data are as follows: Power Plant (in hundred thousand of P) P 13,000 15 years Investment cost Useful life Market Value (end P 3,000 of year 15) Annual operating P 1,000 expenses Overhaul cost – end P 200 of 5th year Overhaul cost – end P 550 of 10th yeararrow_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