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 6, Problem 69APQ
To determine
Selection of alternatives.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Assume you have a total of $200,000 to invest in two corporate stocks identified as Z1 and Z2. The overall rate of return you require on the $200,000 is 26% per year. (a) If $40,000 is invested in Z2 with an estimated i * Z2 of 14% per year, what value must i * Z1 exceed to realize at least 26% per year? (b) If the best return expected from the Z1 stock is 27%, determine the threshold level of investment in Z2 to maintain an overall ROR of 26% per year. Solve by hand or using Goal Seek, as instructed.
For each of the following scenarios, state whether an incremental ROR analysis is required to select an alternative and state why or why not. Assume that alternative Y requires a larger initial investment than alternative X and that the MARR is 20% per year. (a) X has a rate of return of 22% per year, and Y has a rate of return of 20% per year. (b) X has a rate of return of 19% per year, and Y has a rate of return of 21% per year. (c) X has a rate of return of 16% per year, and Y has a rate of return of 19% per year. (d) X has a rate of return of 25% per year, and Y has a rate of return of 23%. (e) X has a rate of return of 20%, and Y has a rate of return of 22% per year.
A total of $50,000 was allocated to a project to detect and reduce insider theft in the ZipCar auto parts store. Two alternatives identified as Y and Z are under consideration. The overall ROR on the $50,000 is expected to be 40%, with the rate of return on the $20,000 increment between Y and Z at 15% per year. If Z is the higher first-cost alternative, (a) what is the size of the investment required in Y, and (b) what is the rate of return on Y?
Chapter 6 Solutions
Basics Of Engineering Economy
Ch. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Prob. 7PCh. 6 - Prob. 8PCh. 6 - A University of Massachusetts study found that...Ch. 6 - Prob. 10P
Ch. 6 - The Closing the Gaps initiative by the Texas...Ch. 6 - Prob. 12PCh. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - Prob. 17PCh. 6 - Prob. 18PCh. 6 - Prob. 19PCh. 6 - Prob. 20PCh. 6 - Prob. 21PCh. 6 - Prob. 22PCh. 6 - Prob. 23PCh. 6 - Prob. 24PCh. 6 - Prob. 25PCh. 6 - A company that manufactures rigid shaft couplings...Ch. 6 - For each of the following scenarios, state whether...Ch. 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 - The four alternatives described below are being...Ch. 6 - Prob. 37PCh. 6 - Prob. 38PCh. 6 - Ashley Foods, Inc. has determined that only one of...Ch. 6 - Five revenue projects are under consideration by...Ch. 6 - Four different machines are under consideration...Ch. 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. 54PCh. 6 - Prob. 55PCh. 6 - Prob. 56PCh. 6 - Prob. 57PCh. 6 - Prob. 58PCh. 6 - Prob. 59PCh. 6 - Prob. 60APQCh. 6 - Prob. 61APQCh. 6 - Prob. 62APQCh. 6 - Prob. 63APQCh. 6 - Prob. 64APQCh. 6 - Prob. 65APQCh. 6 - Prob. 66APQCh. 6 - Prob. 67APQCh. 6 - Prob. 68APQCh. 6 - Prob. 69APQCh. 6 - Prob. 70APQ
Knowledge Booster
Similar questions
- Five mutually exclusive cost alternatives that have infinite lives are under consideration for decreasing the fruit-bruising rates of a thin skin-fruit grading and packing operation (peaches, pears, apricots, etc.). The initial costs and cash flows of each alternative are available. If the MARR is 15% per year, the one alternative to select is: Alternative A B C D E Initial cost, $ −11,000 −12,000 −9,000 −14,000 −15,000 Cash flow, $ per year −1000 −900 −1400 −700 −300 (a) A (b) B (c) D (d) Earrow_forwardSchneeberger, Inc. is considering two alternatives to increase the acceleration of its linear motor actuators. The initial investment required in alternative X is $200,000 and in Y is $150,000. The MARR = 20% per year; a total of $200,000 is available for investment; and the rates of return are i * X = 22% and i * Y = 25% per year. (a) Will the rate of return on the increment of investment between alternatives X and Y be larger or smaller than i*X ? larger or smaller than i * Y? (b) What is the expected i * X-Y?arrow_forwardAssume alternatives A and B are being evaluated by the rate of return method against a MARR of 15% per year. Alternative B requires a higher initial investment than A and the i* values are i * A = 20% and i * B = 16% per year. Under what circumstance is alternative B the preferred choice?arrow_forward
- Ellis Equipment sold a used Massey Ferguson tractor for $55,000 to a South Kansas farmer 10 years ago. (a) What is the uniform net cash flow that the farmer had to receive each year to realize payback and a return of 5% per year on his investment over a period of 3 years? 5 years? 8 years? All 10 years? (b) If the net cash flow was actually $6000 per year, what is the amount the farmer should have paid for the tractor to realize payback plus the 5% per year return over these 10 years?arrow_forwardA small construction company has $100,000 set aside in a capital improvement fund to purchase new equipment. If $30,000 is invested at 30%, $20,000 at 25%, and the remaining $50,000 at 20% per year, what is the overall rate of return on the entire $100,000?arrow_forwardAfter 15 years of employment in the airline industry, John started his own consulting company to use physical and computer simulation in the analysis of commercial airport accidents on runways. He estimates his average cost of new capital at 8% per year for physical simulation projects, that is, where he physically reconstructs the accident using scale versions of planes, buildings, vehicles, etc. He has established 12% per year as his MARR. What net rate of return on capital investments for physical simulation does he expect?arrow_forward
- A project has a first cost of $200,000 with annual costs of $50,000 and revenue of $90,000 per year.What is the payback period at (a) no-return, and (b) i = 7% per year?arrow_forwardA member of congress wants to know the capitalized cost of maintaining a proposal national park. The annual maintenance cost is expected to be P 2 250 000. At an interest rate of 6% per year, the capitalized cost of the maintenance would be closest to:arrow_forwardThe Texas Department of Transportation (TxDOT) is considering two designs for crash barriers along a reconstructed portion of I-10. Design 2B will cost $3 million to install and $125,500 per year to maintain. Design 4R will cost $3.7 million to install and $55,000 per year to maintain. Determine which design should be selected based on a rate of return analysis if TxDOT uses a MARR of 6% per year and a 20-year project period. The rate of return is Not attempted ______%.arrow_forward
- Darnell Enterprises constructed an addition to its building at a cost of $70,000. Extra annual expenses are expected to be $1850, but extra income will be $14,000 per year. How long will it take for the company to recover its investment at an interest rate of 10% per year? Also, write the spreadsheet function that determines np.arrow_forwardA dam will have a first cost of $5,000,000, an annual maintenance cost of $25,000 and minor reconstruction costs of $100,000 every five years. At an interest rate of 8% per year, the capitalized cost of the dam is nearest to:arrow_forwardAlternative A has a rate of return of 14% and alternative B has a rate of return of 17%. If the investment required in B is larger than that required for A, the rate of return on the increment of investment between A and B is: (a) Larger than 14% (b) Larger than 17% (c) Between 14% and 17% (d) Smaller than 14%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