Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 32P
To determine
Calculate the annual production.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Current Attempt in Progress
Mandy is considering investing in an opportunity that would require an upfront cost of $ 520 but would pay $ 150 per year for each of
the next 6 years. If Mandy chooses to invest in this opportunity, what would be the IRR?
Click here to access the TVM Factor Table calculator.
Carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is ±0.5.
Should Mandy invest in this opportunity if her personal MARR is 20%?
Your company is considering the introduction of a new product line. The initial investment required for this project is $500,000, and annual maintenance costs are anticipated to be $45,000. Annual operating costs will be directly proportional to the level of production at $8.50 per unit, and each unit of product can be sold for $65. If the MARR is 15% and the project has a life of 5 years, what is the minimum annual production level for which the project is economically viable? Use the AW method.
Your company is considering the introduction of a new product line. The initial investment required for this project is $500,000, and annual maintenance costs are anticipated to be $45,000. Annual operating costs will be directly proportional to the level of production at $8.50 per unit, and each unit of product can be sold for $65. If the MARR is 15% and the project has a life of 5 years, what is the minimum annual production level for which the project is economically viable? The equipment can be sold for $80,000 at the end of five years.
Chapter 5 Solutions
Engineering Economy (17th Edition)
Ch. 5.A - Use the ERR method with = 8% per year to solve for...Ch. 5.A - Apply the ERR method with = 12% per year to the...Ch. 5.A - Are there multiple IRRs for the following...Ch. 5.A - Are there multiple IRRs for the following cash...Ch. 5 - Tennessee Tool Works (TTW) is considering...Ch. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - What is the capitalized worth of a project that...Ch. 5 - A large induced-draft fan is needed for an...
Ch. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - A corporate bond pays 5% of its face value once...Ch. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - The cash-flow diagram below has an internal rate...Ch. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Your firm is thinking about investing 200,000in...Ch. 5 - Determine the FW of the following engineering...Ch. 5 - Prob. 22PCh. 5 - Fill in Table P5-23 below when P = 10,000, S = 2,...Ch. 5 - An asset has an initial capital investment of4...Ch. 5 - A simple, direct space heating system is currently...Ch. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Its easier to make money when interest rates in...Ch. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Stan Moneymaker has been informed of a major...Ch. 5 - The required investment cost of a new, large...Ch. 5 - Prob. 35PCh. 5 - A parking garage has a capital investment cost of...Ch. 5 - The city of Oak Ridge is considering the...Ch. 5 - Prob. 38PCh. 5 - Prob. 39PCh. 5 - Prob. 40PCh. 5 - Prob. 41PCh. 5 - Prob. 42PCh. 5 - Prob. 43PCh. 5 - To purchase a used automobile, you borrow 10,000...Ch. 5 - Your boss has just presented you with the summary...Ch. 5 - Experts agree that the IRR of a college education...Ch. 5 - A company has the opportunity to take over a...Ch. 5 - The prospective exploration for oil in the outer...Ch. 5 - Prob. 49PCh. 5 - An integrated, combined cycle power plant produces...Ch. 5 - A computer call center is going to replace all of...Ch. 5 - Prob. 52PCh. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - The upturned wingtips on jet aircraft reduce drag...Ch. 5 - Prob. 56PCh. 5 - Prob. 57PCh. 5 - Prob. 58PCh. 5 - In southern California a photovoltaic (PV) system...Ch. 5 - a. Calculate the IRR for each of the three...Ch. 5 - Prob. 61PCh. 5 - A hospital germ-fighting and floor cleaning robot,...Ch. 5 - Prob. 63PCh. 5 - Prob. 64SECh. 5 - Prob. 65SECh. 5 - Prob. 66SECh. 5 - A certain medical device will result in an...Ch. 5 - Refer to Problem 5-61. Develop a spreadsheet to...Ch. 5 - Prob. 69CSCh. 5 - Prob. 70CSCh. 5 - Suppose that the average utilization of the CVD...Ch. 5 - Prob. 72FECh. 5 - Prob. 73FECh. 5 - Prob. 74FECh. 5 - Prob. 75FECh. 5 - Prob. 76FECh. 5 - Prob. 77FECh. 5 - Prob. 78FECh. 5 - Prob. 79FECh. 5 - A new machine was bought for 9,000 with life of...Ch. 5 - Prob. 81FECh. 5 - Prob. 82FECh. 5 - Prob. 83FECh. 5 - Prob. 84FECh. 5 - Prob. 85FE
Knowledge Booster
Similar questions
- A new Wave soldering machine is expected to save Fast Circuit Boards 11,500 per year through a reduction of labour costs and increased quality. The machine has an expected life of 8 years, with zero salvage value after that time. The company can expect to get a 10 percent return on any investment. Determine the maximum price that they can afford to pay for the machine up front? Machine Costarrow_forwardAn equipment is bought for $9,000 and sold at the end of its service life for $800. If the service period is 10 years and the MARR is 10%, then the minimum annual savings that this equipment must yield for it to break even is closest to? a) $1,414 b) $1,701 c) $1,312 O d) $1,514arrow_forwardA company is considering the purchase of a fleet of % ton pickup trucks for their contracting business. The owner is trying to decide whether to purchase the trucks with diesel or gas engines. The company specifies an intermal rate of return on equipment purchases of 6% . The owner estimates the following cash flows of costs for a gas and diesel equipped truck. What is the EUAC of the Diesel Truck? Gas Diesel Purchase Purchase Year Fuel Fuel Maintain Maintain $30,000 $250 $300 $39,000 $6,750 $5,000 $1,000 $5,000 $1,500 1 $500 $6,750 $6,750 2 3 $350 $5,000 4 $400 $6,750 $2,000 $5,000 $2,500 $5,000 $3,000 $5,000 $3,500 $5,000 $4,000 | $5,000 5 6. Note: no need to find the common useful life when using EUAC.arrow_forward
- A continuous improvement team has helped to save $20,000 for the company on a process that will not be changed for the next 10 years. If the team has spent $50,000 on the improvement project, the net present worth (NPW) of savings on this improvement project is $150,000 at a MARR of 5%. O True O Falsearrow_forwardA new machine can be purchased today for $450,000. The annual revenue from the machine is calculated to be $72,000, and the equipment will last 10 years. Expect the maintenance and operating costs to be $4500 a year and to increase $750 per year. The salvage value of the machine will be $35,000. What is the rate of return for this machine?arrow_forwardThe Gigadigit Manufacturing Inc. is considering to produce a new product. The following data have been provided to management: Sales price S17.50/unit Equipment cost S250,000 Incremental overhead cost |550,000/year Sales and marketing cost $150,000/year Operating and maintenance cost $25/operating hour Production time/1,000 units 100 hours Packaging and shipping cost s0.50/unit Planning horizon Minimum attractive rate of return 15% 5 years The managers would like to know the viability of this product and how it would roll out in sales. (a) To give them basis and insight what is the break-even value of units that must be sold annually to keep the product viable? (b) If the target revenue is from 30,000 units sold, what is the expected profit? (C) If the profit drops by 13% due to equipment replacement, how much must have been the cost of the alternative equipment? (d) Provide graph for (a)arrow_forward
- Mr. Russ T. Steele sells his old vehicle for $5000 (you get more if you private salel) and pays cash for a used (but newer vehicle) that costs $10,000. He also understands that he needs to allow for maintenance and operation costs of his vehicle. He estimates that these costs will be approximately $2000 a year and estimates that the costs will increase by $100 per year. He hopes to keep the vehicle for five years and then sell it for an estimated value of $2000. Mr. Steele has an MARR of 8%. The present value of the cash flow associated with his purchase is most nearly: Oa. -$7,400 b.$-12,400 C $12,000 Od.-$15,100arrow_forwardA business industry has a new product whose sales are expected to be 1.2, 3.5, 7, 5, 3 million units per year over the next 5 years. Production, distribution, and overhead costs are stable at $120 per unit. The price will be $200 per unit for the first two years, and then $180, $160 and $140 for the next three years. The remaining R&D and production costs are $300 million. If the interest rate is 15%, determine whether this business will profit using present worth method. What is the present worth? *arrow_forwardA firm is must choose to buy the GSU-3300 or the UGA-3000. Both machines make the firm's production process more efficient which in turn increases incremental cash flows. The GSU-3300 produces incremental cash flows of $25,025.00 per year for 8 years and costs $102,242.00. The ÚGA-3000 produces incremental cash flows of $27,530.00 per year for 9 years and cost $126,773.00. The firm's WACĆ is 8.37%. What is the equivalent annual annuity of the GSU-3300? Assume that there are no taxes.arrow_forward
- Mary, a project manager for ABC Ic., is reviewing a product quality improvement project. She has determined that the project's Annual Worth of $3,396. for a period of 8 years. She now has to calculate the IRR for the project but unfortunately she has lost some information about the cash flows. She knows only that the project has: a 8-year project life with an initial cost of $400,000. a set of equal revenue cash flows occurred at the end of each year for 8 years, and • MARR used for calculation the Annual Worth was 8%. Find the annual revenue first and then calculate the IRR for the project = ? O 14% < IRR (i*) < 15% O 13% < IRR (i*) < 14% O 10% < IRR (i*) < 11% O 9% < IRR (i*) < 10% O 8% < IRR (i*) < 9%arrow_forwardCompute the annual equivalent repair cost over a 5 year life if a typewriter is warranted for 2 years and has estimated repair cost of $1000 annually. Use i = 10%. Shoe your solution.arrow_forwardNorthern Engineering is analyzing a mining project. Annual production, unit costs, and unit revenues are in the table. The first cost of the mine setup is $6 million. If i is 15%, what is the PW?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