The AW value for Design A is $ /mi. (Round to the nearest hundreds.) The PW value for Design A is $ /mi. (Round to the nearest hundreds.) The AW value for Design B is $ /mi. (Round to the nearest hundreds.) The PW value for Design B is $ /mi. (Round to the nearest hundreds.) The most economical design on the basis of AW and PW is
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The AW value for Design A is $ /mi. (Round to the nearest hundreds.)
The PW value for Design A is $ /mi. (Round to the nearest hundreds.)
The AW value for Design B is $ /mi. (Round to the nearest hundreds.)
The PW value for Design B is $ /mi. (Round to the nearest hundreds.)
The most economical design on the basis of AW and PW is
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- A new highway is to be constructed. Design A calls for a concrete pavement costing $85 per foot with a 16-year life; three paved ditches costing $4 per foot each; and four box culverts every mile, each costing $8,000 and having a 16-year life. Annual maintenance will cost $1,700 per mile; the culverts must be cleaned every four years at a cost of $400 each per mile. Design B calls for a bituminous pavement costing $40 per foot with a 8-year I four sodded ditches costing $1.45 per foot each; and two pipe culverts every mile, each costing $2,200 and having a 8-year life. The replacement culverts will cost $2,500 each. Annual maintenance will cost $2,600 per mile; the culverts must be cleaned yearly at a cost of $220 each per mile; and the annual ditch maintenance will cost $1.65 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a 16-year period. Find the most economical design on the basis of AW and PW if the MARR is 8% per year. Click the icon to…A new highway is to be constructed. Design A calls for a concrete pavement costing $80 per foot with a 20-year life; four paved ditches costing $3 per foot each; and four box culverts every mile, each costing $10,000 and having a 20-year life. Annual maintenance will cost $1,600 per mile; the culverts must be cleaned every five years at a cost of $400 each per mile. Design B calls for a bituminous pavement costing $55 per foot with a 10-year life; four sodded ditches costing $1.40 per foot each; and four pipe culverts every mile, each costing $2,100 and having a 10-year life. The replacement culverts will cost $2,450 each. Annual maintenance will cost $2,600 per mile; the culverts must be cleaned yearly at a cost of $225 each per mile; and the annual ditch maintenance will cost $1.55 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a 20-year period. Find the most economical design on the basis of AW and PW if the MARR is 12% per year. Click the…A new highway is to be constructed. Design A calls for a concrete pavement costing $90 per foot with a 12-year life; two paved ditches costing $4 per foot each; and two box culverts every mile, each costing $7,000 and having a 12-year life. Annual maintenance will cost $1,700 per mile; the culverts must be cleaned every three years at a cost of $550 each per mile. Design B calls for a bituminous pavement costing $40 per foot with a 6-year life; three sodded ditches costing $1.50 per foot each; and three pipe culverts every mile, each costing $2,100 and having a 6-year life. The replacement culverts will cost $2,350 each. Annual maintenance will cost $2,600 per mile; the culverts must be cleaned yearly at a cost of $230 each per mile; and the annual ditch maintenance will cost $1.30 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a 12-year period. Find the most economical design on the basis of AW and PW if the MARR is 6% per year. Click the…
- Ch 5 economics Nancy’s Notions pays a delivery firm to distribute its products in the metro area. Delivery costs are $31,500 per year. Nancy can buy a used truck for $8,000 that will be adequate for the next 3 years. Operating and maintenance costs are estimated to be $24,000 per year. At the end of 3 years, the used truck will have an estimated salvage value of $3,200. Nancy’s MARR is 25%/year. What is the present worth of this investment? $Problem 1: Loblolly Pine Plantation (Known Rotation Range) A forester is considering planting loblolly pine on a recently acquired site. They expect the optimal rotation to be between 20 and 40 years. The following information is available: • • • • Land cost: $500/acre (one-time cost at year 0) Establishment cost: $250/acre at year 0 Annual property taxes: $3/acre/year Timber price: $100/acre/year (assumed constant throughout the rotation) Discount rate: 7% Calculate the LEV for each year between 20 and 40 years and identify the optimal rotation age that maximizes LEV.A firm is considering the “make vs. buy” question for a subcomponent. If the part is made in-house, the production data would be: first cost = $350, 000; annual costs for operation = $45, 000; salvage value = $15, 000; project life = 5 years; interest = 10%; and material cost per unit = $8.50. If annual production is 10,000 units, the maximum amount that the firm should be willing to pay to an outside vendor for the subcomponent is nearest? (a) $10 per unit (b) $16 per unit (c) $22 per unit (d) $28 per unit?
- The Engineering Economist is a quarterly journal that once cost $20 for 1 year, $38 for 2 years, or $56 for 3 years. (a) What is the IRR for subscribing for 2 years rather than for 1 year at a time? (b) What is the IRR for subscribing for 3 years rather than for 1 year at a time?A new highway is to be constructed, and asphalt paving will be used. The asphalt will cost $150 per foot, including the material and the paving operation. Due to the heavy usage expected, the asphalt is expected to last 5 years before requiring resurfacing. It is anticipated that the cost of resurfacing will remain the same per foot. Concrete drainage ditches will be installed to each side of the highway; they will each cost $7.75 per foot to install. Ditches will have to be replaced every 15 years; the cost of replacing them will also be $7.75 per foot. Four pipe culverts will be installed every mile; each culvert will cost $8,000 and will last 10 years; replacement culverts will cost $10,000 each, indefinately. Annual maintanance of the highway will cost $9,000 per mile. Cleaning each culvert will cost $1,250 per year. Cleaning and maintaining each ditch will cost $3.75 per foot per year. Determine the capitalized cost (CC) per mile of highway using a MARR of 5%.1. Breakeven Analysis An aerodynamic three-wheeled automobile (the Dart) runs on compressed naturalgas stored in two cylinders in the rear of the vehicle. The $13,000 Dart can cruise at speeds up to 80 miles per hour, and it can travel 100 miles per gallon of fuel. Another two-seater automobile costs $10,000 and averages 50 miles per gallon of compressed natural gas. If fuel costs $8.00 per gallon and MARR is 10% and 15%per year, over what range of annual miles driven is the Dart more economical? Assume a useful life of five years for both cars.2. Sensitivity Analysis We know the standard means of cutting the high cost of driving our automobiles—slow down your speed, no jack rabbit starts, inflate tires properly, clean air filters regularly, and so on. Another way to reduce the cost of driving is to join every bigrigger in the United States and half of Europe-go diesel. Diesels are inherently more efficient than gasoline engines because they deliver a third better fuel mileage. They…
- A dam is proposed on a stretch of wild river, a river that is currently used for recreation. The dam will generate electricity. The dam will have a useful life of 50 years, after which its reservoir will be full of sediment and the dam will need to be removed. The following are characteristics of the dam: Initial Cost: $100,000,000 Electricity produced: 100,000 MWh per year, at $100/MWh. Cost of decommissioning dam: $10,000,000. Value of recreation lost: $5,000,000 per year. 1. If the social discount rate is 3% per year, is the dam a good idea? 2. If the social discount rate is 10% per year, is the dam a good idea? 3. Calculate the "cutoff" discount rate, c3 such that the dam is a good idea for discount rates c.Calculate the annual net benefit from the given project summary. Capital Costs = $43,000; Revenue = $16,000/year; Operation and Maintenance Costs = $7,800/year Salvage Value = $19,000; Project Lifetime = 6 years; Effective Interest Rate = 0.09.If mutually exclusive projects with normal cash flows are being analyzed, the net present value (NPV) and internal rate of return (IRR) methods always agree. Projects Y and Z are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows. Year Project Y Project Z 0 -$1,500 -$1,500 1 $200 $900 2 $400 $600 3 $600 $300 4 $1,000 $200 NPV (Dollars) 800 600 Project Y 400 Project Z 200 -200 0246 8 10 12 14 16 18 20 COST OF CAPITAL (Percent) If the weighted average cost of capital (WACC) for each project is 14%, do the NPV and IRR methods agree or conflict? O The methods agree. O The methods conflict.