Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 6, Problem 28P
To determine
Calculate the minimum hours.
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Problem 05.031 Future Worth Analysis
A small strip-mining coal company is trying to decide whether it should purchase or lease a new clamshell. If purchased, the "shell" will
cost $137,500 and is expected to have a $42,500 salvage value after 6 years. Alternatively, the company can lease a clamshell for only
$13,000 per year, but the lease payment will have to be made at the beginning of each year. If the clamshell is purchased, it will be
leased to other strip-mining companies whenever possible, an activity that is expected to yield revenues of $9,000 per year. If
the company's MARR is 11% per year, should the clamshell be purchased or leased on the basis of a future worth analysis? Assume the
annual M&O cost is the same for both options.
The future worth when purchased is $
The future worth when leased is $
The clamshell should b✓ (Click to select)
leased
purchased
A large city in the mid-West needs to acquire a street-cleaning machine to keep its roads looking nice year-round. A used cleaning vehicle will cost $85,000 and have a $20,000 market (salvage) value at the end of its five-year life. A new system with advanced features will cost $150,000 and have a $40,000 market value at the end of its five-year life. The new system is expected to reduce labor hours compared with the used system. Current street-cleaning activity requires the used system to operate 8 hours per day for 20 days per month. Labor costs $50 per hour (including fringe benefits), and MARR is 12% per year.The best estimate for the reduction of labor hours for the new system is 17% (compared with the used system). Investigate how sensitive the decision is to (a) changes in the MARR, (b) changes in the market value of the new system, and (c) the productivity improvement of the new system. Graph your results. Hint: Think incrementally!
The purchase of a motor for $17,152 and a generator for $7,596 will allow a company
to produce its own energy. The configuration can be assembled for $522. The service
will operate for 1,376 hours/year for 10 years. The maintenance cost is $300/year,
and the cost to operate is $0.85/h for fuel and related costs. There is $4,193 in
salvage value for the system at the end of 10 years. Using sinking fund depreciation
„interest rate of 10%, what is the annual cost for the operation?
Chapter 6 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Consider the cash flows in Table P6.7 for the...Ch. 6 - Prob. 8PCh. 6 - Prob. 9PCh. 6 - The repeating cash flows for a certain project are...
Ch. 6 - Beginning next year, a foundation will support an...Ch. 6 - Prob. 12PCh. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - Prob. 17PCh. 6 - Prob. 18PCh. 6 - The Geo-Star Manufacturing Company is considering...Ch. 6 - Prob. 20PCh. 6 - Prob. 21PCh. 6 - Prob. 22PCh. 6 - Prob. 23PCh. 6 - Prob. 24PCh. 6 - Prob. 25PCh. 6 - Prob. 26PCh. 6 - Prob. 27PCh. 6 - Prob. 28PCh. 6 - Prob. 29PCh. 6 - Prob. 30PCh. 6 - Prob. 31PCh. 6 - Prob. 32PCh. 6 - Prob. 33PCh. 6 - Prob. 34PCh. 6 - Prob. 35PCh. 6 - Prob. 36PCh. 6 - Prob. 37PCh. 6 - Prob. 38PCh. 6 - Prob. 39PCh. 6 - Prob. 40PCh. 6 - Prob. 41PCh. 6 - Prob. 42PCh. 6 - Prob. 43PCh. 6 - Prob. 44PCh. 6 - Prob. 45PCh. 6 - Prob. 46PCh. 6 - Prob. 47PCh. 6 - Prob. 48PCh. 6 - Prob. 49PCh. 6 - Prob. 50PCh. 6 - Prob. 51PCh. 6 - Prob. 52PCh. 6 - Prob. 53PCh. 6 - Prob. 1STCh. 6 - Prob. 2STCh. 6 - Prob. 3STCh. 6 - Prob. 4ST
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