ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Chapter 7, Problem 74P
To determine
The alternative which should be preferred.
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Hospital is evaluating the purchase of new office equipment from three vendors. Assume MARR=15% and 4 year useful life on all equipment. Select best vendor.
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Two designs are suitable for housing track and field events. Design N costs $800,000 with annual upkeep costs including maintenance, repair, heat, and janitor service, of $25,000 a year. Its life is expected to be permanent. Design T costs $450,000 with annual upkeep costs for the previous items of $35,000 a year. However, with this design, repairs costing $15,000 will be required every 5 years, and the life will be 25 years with a probable salvage at that date of $50,000. The minimum required rate of return is 10%. Use present worth analysis to compare these two alternatives.
Carlisle Company has been cited and must invest in equipment to reduce stack emissions or face EPA fines of $18,500 per year. An emission reduction filter will cost $75,000 and have an expected life of 5 years. Carlisle’s MARR is 10%/year. Solve, a. What is the future worth of this investment? b. What is the decision rule for judging the attractiveness of investments based on future worth? c. Is the filter economically justified?
Chapter 7 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 7 - Prob. 1QTCCh. 7 - Prob. 2QTCCh. 7 - Prob. 3QTCCh. 7 - Prob. 4QTCCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6P
Ch. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10PCh. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - Prob. 15PCh. 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. 27PCh. 7 - Prob. 28PCh. 7 - Prob. 29PCh. 7 - Prob. 30PCh. 7 - Prob. 31PCh. 7 - Prob. 32PCh. 7 - Prob. 33PCh. 7 - Prob. 34PCh. 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 - Prob. 47PCh. 7 - Prob. 49PCh. 7 - Prob. 50PCh. 7 - Prob. 51PCh. 7 - Prob. 52PCh. 7 - Prob. 53PCh. 7 - Prob. 54PCh. 7 - Prob. 55PCh. 7 - Prob. 56PCh. 7 - Prob. 57PCh. 7 - Prob. 58PCh. 7 - Prob. 59PCh. 7 - Prob. 60PCh. 7 - Prob. 61PCh. 7 - Prob. 62PCh. 7 - Prob. 63PCh. 7 - Prob. 64PCh. 7 - Prob. 65PCh. 7 - Prob. 66PCh. 7 - Prob. 67PCh. 7 - Prob. 68PCh. 7 - Prob. 69PCh. 7 - Prob. 70PCh. 7 - Prob. 71PCh. 7 - Prob. 72PCh. 7 - Prob. 73PCh. 7 - Prob. 74PCh. 7 - Prob. 75PCh. 7 - Prob. 76PCh. 7 - Prob. 77PCh. 7 - Prob. 78PCh. 7 - Prob. 79PCh. 7 - Prob. 80PCh. 7 - Prob. 81PCh. 7 - Prob. 82PCh. 7 - Prob. 83PCh. 7 - Prob. 84PCh. 7 - Prob. 85PCh. 7 - Prob. 87PCh. 7 - Prob. 88PCh. 7 - Prob. 89P
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- Bahrain Metals company is considering installing solar roof panels to reduce the cost of the electricity bills. The ROR of Alternative A is 8%, the Future Worth of Alternative B is $17,234, the Present Worth of Alternative C is $11,946, and the Annual Worth of Alternative D is $2,948. Assume all alternatives have a 5-year useful life and that the MARR for the company is 10%. The alternative that should be chosen is: O A C Do nothing Not enough information B.arrow_forwardIf the IRR of Alternative A is 10%, the IRR of Alternative B is 8% and the MARR is 6%, which of the following is true? OAlternative B is preferred over Alternative A Alternative A is preferred over Alternative B Both alternatives are preferred over the do nothing alternative Both b and c are truearrow_forwardComplete the decision rule for the IRR method. If then the project is economically justified.arrow_forward
- Economical solar energy and energy from fusion have been identified as two of engineering's grand challenges. While work continues on these grand challenges, conservation of energy from non-renewable sources is vital. On a practical level, installing low thermal emissivity windows (low-e windows) on buildings can contribute to energy conservation. Installing low-e windows on a small office building is estimated to cost $11,000. The windows are expected to last 10 years and have no salvage value at that time. The energy savings from the windows are expected to be $2,275 in the 1st year. After the 1st year, the savings are expected to increase by $225 each year due to escalating fossil fuel costs. MARR is 12% per year and annual worth is the preferred measure of economic worth. Part a Are the low-e windows an economically attractive investment? Click here to access the TVM Factor Table Calculator. The annual worth of installing the low-e windows is $ Carry all interim calculations to 5…arrow_forwardEconomical solar energy and energy from fusion have been identified as two of engineering's grand challenges. While work continues on these grand challenges, conservation of energy from non-renewable sources is vital. On a practical level, installing low thermal emissivity windows (low-e windows) on buildings can contribute to energy conservation. Installing low-e windows on a small office building is estimated to cost $11,000. The windows are expected to last 10 years and have no salvage value at that time. The energy savings from the windows are expected to be $2,275 in the 1st year. After the 1st year, the savings are expected to increase by $225 each year due to escalating fossil fuel costs. MARR is 12% per year and annual worth is the preferred measure of economic worth.arrow_forwardIn present worth analysis, the alternative option with the present worth among alternatives is the best option.arrow_forward
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