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 7, Problem 36P
(a):
To determine
Select the alternative based on the BTCF.
(b):
To determine
Select the alternative based on the ATCF.
(c):
To determine
Difference in selection.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
You purchased a building five years ago for $200,000. Its annual maintenance expense has been $15,000 per year. At the end of three years, you spent $55,000 on roof repairs. At the end of five years (now), you sell the building for $250,000. During the period of ownership, you rented out the building for $60,000 per year paid at the beginning of each year. If your MARR is 8% per year.
a) Use the PW and AW methods to evaluate this investment.
b) Calculate IRR and ERR(( Ԑ=MARR).
(Upload the picture of your complete solutions including the correct cash flow diagram and your conclusion.)
You purchased a building five years ago for $200,000. Its annual maintenance expense has been $15,000 per year. At the end of three years, you spent $55,000 on roof repairs. At the end of five years (now), you sell the building for $250,000. During the period of ownership, you rented out the building for $60,000 per year paid at the beginning of each year. If your MARR is 8% per year.
a) Use the PW and AW methods to evaluate this investment.
b) Calculate IRR and ERR(( Ԑ=MARR).
include the cash flow diagram and conclusion
A $45,000 investment in a new conveyor system is projected to improve throughput and
increasing revenue by $14,000 per year for five years The conveyor will have an estimated
market value of $4,000 at the end of five years. Using an MARR = 12% per year, what is the
FW?
$-19,329.40
$13,635.70
$16,998.90
none of the above
K
?
Chapter 7 Solutions
Engineering Economy (17th Edition)
Ch. 7 - How are depreciation deductions different from...Ch. 7 - Prob. 2PCh. 7 - Explain the difference between real and personal...Ch. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10P
Ch. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - A manufacturer of aerospace products purchased...Ch. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 18PCh. 7 - Prob. 19PCh. 7 - Prob. 20PCh. 7 - Prob. 21PCh. 7 - Prob. 22PCh. 7 - Prob. 23PCh. 7 - Prob. 24PCh. 7 - Prob. 25PCh. 7 - Prob. 26PCh. 7 - Prob. 27PCh. 7 - Prob. 28PCh. 7 - Prob. 29PCh. 7 - Prob. 30PCh. 7 - Prob. 31PCh. 7 - Prob. 32PCh. 7 - Prob. 33PCh. 7 - Refer to Problem 6-79. The alternatives all have a...Ch. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Prob. 39PCh. 7 - Prob. 40PCh. 7 - Prob. 41PCh. 7 - Prob. 42PCh. 7 - Prob. 43PCh. 7 - Prob. 44PCh. 7 - Prob. 45PCh. 7 - Prob. 46PCh. 7 - AMT, Inc., is considering the purchase of a...Ch. 7 - Prob. 48PCh. 7 - Prob. 49PCh. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Determine the after-tax yield (i.e., IRR on the...Ch. 7 - A 529-state-approved Individual Retirement Account...Ch. 7 - Prob. 55PCh. 7 - Prob. 56PCh. 7 - Prob. 57SECh. 7 - Prob. 58SECh. 7 - Prob. 59SECh. 7 - Refer to the chapter opener and Example 7-14. As...Ch. 7 - Prob. 61FECh. 7 - The Parkview Hospital is considering the purchase...Ch. 7 - Prob. 63FECh. 7 - Prob. 64FECh. 7 - Prob. 65FECh. 7 - Prob. 66FECh. 7 - Prob. 67FECh. 7 - Prob. 68FECh. 7 - Prob. 69FECh. 7 - Prob. 70FECh. 7 - Prob. 71FECh. 7 - Prob. 72FECh. 7 - Prob. 73FECh. 7 - Prob. 74FECh. 7 - Prob. 75FECh. 7 - If the federal income tax rate is 35% and the...Ch. 7 - Prob. 77FECh. 7 - Acme Manufacturing makes their preliminary...Ch. 7 - Prob. 79FECh. 7 - Prob. 80FECh. 7 - Prob. 81FECh. 7 - Prob. 82FECh. 7 - Prob. 83FECh. 7 - Prob. 84FECh. 7 - Two insulation thickness alternatives have been...
Knowledge Booster
Similar questions
- You purchased a building five years ago for $200,000. Its annual maintenance expense has been $15,000 per year. At the end of three years, you spent $55,000 on roof repairs. At the end of five years (now), you sell the building for $250,000. During the period of ownership, you rented out the building for $60,000 per year paid at the beginning of each year. If your MARR is 8% per year. a) Use the PW and AW methods to evaluate this investment. b) Calculate IRR and ERR(( Ԑ=MARR).arrow_forwardThe city of Oak Ridge is considering the construction of a four kilometer (km) greenway walking trail. It will cost $1,000 per km to build the trail and $300 per km per year to maintain it over its 20-year life. If the city’s MARR is 7% per year, what is the equivalent uniform annual cost of this project? Assume the trail has no residual value at the end of 20 years.arrow_forwardAn aerodynamic three-wheeled automobile (the Dart) runs on compressed natural gas stored in two cylinders in the rear of the vehicle. The $13,000 Dart can cruise at speeds up to 85 miles per hour, and it can travel 90 miles per gallon of fuel. Another two-seater automobile costs $12,000 and averages 50 miles per gallon of compressed natural gas. If fuel costs $8.00 per gallon and MARR is 10% per year, over what range of annual miles driven is the Dart more economical? Assume a useful life of six years for both cars. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. ... Dart is more economical if you are planning on driving more per year. (Round to the nearest whole number.) miles orarrow_forward
- Vidhi is investing in some rental property in Collegeville and is investigating her income from the investment. She knows the rental revenue will increase each year, but so will the maintenance expenses. She has been able to generate the data that follows regarding this investment opportunity. Assume that all cash flows occur at the end of each year and that the purchase and sale of this property are not relevant to the study. • If Vidhi's MARR = 6% per year, is this investment a profitable undertaking? Use Future Worth method! Year Revenue Year Expenses 1 $6,000 1 $3,100 2 6,200 2 3,300 6,300 3 3,500 6,400 4 3,700 6,500 5 3,900 6,600 6 6,100 6,700 7 4,300 6,800 8 4,500 6,900 4,700 7,000 4,900 3 4 5 6 7 8 9 10 9 10arrow_forwardA tunnel to transport water initially cost $1,000,000 and has expected maintenance costs that will occur in a 6-year cycle as shown below, assume MARR is 20% per year. note (writ all numbers without rounding and without any units) End of Year: Maintenance: $35,000 $35,000 $35,000 $45,000 $45,000 $60,000 Compute the Equivalent Annual Cost of the maintenance. Hint: Don't insert the negative sign Compute the Capitalized Cost? Hint: Don't insert the negative signarrow_forwardMary, 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_forward
- A government has decided to build a bridge. that initial cost is estimated to be 60,000,000. the annual maintenance is estimated to be 4,000,000. every ten years a minor upgrade will be needed costing 20,000,000. every 20 years a major repair and refurbishment will be 40,000,000. If the bridge is expected to last indefinitely and effective I = 6% per year what is the capitalized cost of the bridge?arrow_forwardMarian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $5,560 at the end of each of the next 3 years. The opportunity requres an initial investment of $1,390 plus an additional investment at the end of the second year of $6,950. What is the NPV of this opportunity if the interest rate is 2.2% per year? Should Marian take it?arrow_forwardAn industrial coal-fired boiler for process steam is equipped with a 10-year-old electrostatic precipitator (ESP). Changes in coal quality have caused stack emissions to be in noncompliance with federal standards for particulates. Two mutually exclusive alternatives have been proposed to rectify this problem (doing nothing is not an option). The MARR is 9% per year. Make a recommendation regarding which alternative to select. 3. An industrial coal-fired boiler for process steam is equipped with a 10-year-old electrostatic precipitator (ESP). Changes in coal quality have caused stack emissions to be in noncompliance with federal standards for particulates. Two mutually exclusive alternatives have been proposed to rectify this problem (doing nothing is not an option). Capital investment Annual operating expenses Useful Life New Baghouse $1,140,000 $115,500 10 years New ESP $992,500 $73,200 10 years The MARR is 9% per year. Make a recommendation regarding which alternative to select.arrow_forward
- At 20% cpd. monthly., find the capitalized cost of a bridge whose cost is P673777 with a life of 22 years, if the bridge must be rehabilitated at a cost of P218341 at the end of each 22 years.arrow_forwardA project has an initial cost of $150,000. The annual operating cost is $8000 for the first 10 years and $5000 thereafter. There is a recurring $15000 maintenance cost each 15 years. The equation that represents the capitalized cost of this project at i=10% is: CW(10%) =150,000+8,000(P/A, 10 %, 10)+(5000/0.1) (P/F, 10%, 11 ) + (15000 (A/F, 10%, 15))/0.1 CW(10%) - 150,000+8,000(P/A, 10 %, 10) +(5000/0.1) (P/F, 10%, 10 ) + ( 15000(A/F, 10%, 15))/0.1 O CW(10%) =150,000+8,000(P/A, 10 %, 10) + (5000 / 0.1) ( P/F, 10%, 11) +15000(A/F, 10%, 15) O CW(10%) =150,000+8,000(P/A, 10 %, 10) +(5000/0.1) (P/F, 10% , 9) +(15000(A/F, 10%, 15))/0.1arrow_forwardOn average, it needs P250,000 per year and an additional P600,000 every 4 years for major repairs to maintain a certain three-storey office building. How much must be paid now to take care of these payments on a bank that offers 8% per year? choices: none of the above P143,999.078 P4,789,355.06 P5,000,000.06arrow_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