- Think back to your first hour after awakening this morning. List 15 decision-making opportunities that existed during that hour. After you have done that, mark the decision-making opportunities that
- Some of the following problems would be suitable for solution by engineering economic analysis. Which ones are they?(a) Would it be better to buy an automobile with a diesel engine or a gasoline
- Which one of the following problems is most suitable for analysis by engineering economic analysis?(a) Some 45jt candy bars are on sale for 12 bars for $3. Sandy, who eats a couple of candy bars a
- If you have $300 and could make the right decisions, how long would it take you to become a millionaire? Explain briefly what you would do.
- The owner of a small machine shop has just lost one of his larger customers. The solution to his problem, he says, is to fire three machinists to balance his workforce with his current level of
- Every college student had the problem of selecting the college or university to attend. Was this a simple, intermediate, or complex problem for you? Explain.
- The college bookstore has put pads of engineering computation paper on sale at half price. What is the minimum and maximum number of pads you might buy during the sale? Explain.
- Consider the seven situations described. Which one situation seems most suitable for solution by engineering economic analysis?(a) Jane has met two college students that interest her. Bill is a music
- An automobile manufacturer is considering locating an automobile assembly plant in your region. List two simple, two intermediate, and two complex problems associated with this proposal.
- Consider the following situations. Which ones appear to represent rational decision making? Explain.(a) Joe's best friend has decided to become a civil engineer, so Joe has decided that he, too, will
- Identify possible objectives for NASA. For your favorite of these, how should alternative plans to achieve the objective is evaluated?
- Suppose you have just 2 hours to answer the question, How many people in your home town would be interested in buying a pair of left-handed scissors? Give a step-by-step outline of how you would seek
- A college student determines that he will have only $50 per month available for his housing for the coming year. He is determined to continue in the university, so he has decided to list all feasible
- Describe a situation where a poor alternative was selected, because there was a poor search for better alternatives.
- Choose the better of the undesirable alternatives. The three economic criteria for choosing the best alternative are minimize input, maximize output, and maximize the difference between output and
- As in Problem 1-18, state the appropriate economic criterion for each of the following situations.(a) The engineering school held a raffle of an automobile with tickets selling for'50~each or three
- Seven criteria are given in the chapter for judging' which is the best alternative. After reviewing the list, devise three additional criteria that might be used.
- Suppose you are assigned the task of determining the route of a new highway through an older section of town. The highway will require that many older homes must be either relocated or torn down. Two
- Identify benefits and costs for Problem 1-21.
- In the fall, Jay Thompson decided to live in a university dormitory. He signed a dorm contract under which he was obligated to pay the room rent for the full college year. One clause stated that if
- An electric motor on a conveyor burned out. The foreman told the plant manager that the motor had to be replaced. The foreman indicated that there were no alternatives and asked for authorization to
- Bill Jones's parents insisted that Bill buy himself a new sport shirt. Bill's father gave specific instructions, saying the shirt must be in "good taste,” that is, neither too wildly colored nor
- A farmer must decide what combination of seed, water, fertilizer, and pest control will be most profitable for the coming year. The local agricultural college did a study of this farmer's situation
- Identify the alternatives, outcomes, criteria, and process for the selection of your college major? Did you make the best choice for you?
- Describe a major problem you must address in the next two years. Use the techniques of this chapter to structure the problem and recommend a decision.
- One strategy for solving a complex problem is to break the problem into a group of less complex problems and then find solutions to the smaller problems. The result is the solution of the complex
- On her first engineering job, Joy Hayes was given the responsibility of determining the production rate for a new product. She has assembled data as indicated on the graphs:(a) Select an appropriate
- Willie Lohmann travels from city to city in the conduct of his business. Every other year he buys a used . car for about $12,000. The auto dealer allows about $8000 as a trade-in allowance with the
- Maria, a college student, is getting ready for three final examinations at the end of the school year. Between now and the start of exams, she has 15 hours of study time available. She would like to
- A city is in need of increasing its rubbish disposal facilities. There is a choice of two rubbish disposal areas, as follows. Area A: A gravel pit with a capacity of 16 million cubic meters. Owing to
- An oil company is considering adding an additional grade of fuel at its service stations. To do this, an additional 3000-gallon tank must be buried at each station. Discussions with tank fabricators
- The vegetable buyer for a group of grocery stores has decided to sell packages of sprouted grain in the vegetable section of the stores. The product is perishable and any remaining unsold after one
- Cathy Gwynn, a recently graduated engineer, decided to invest some of her money in a "Quick Shop" grocery store. The store emphasizes quick service, a limited assortment of grocery items, and rather
- Jim Jones, a motel owner, noticed that just down the street the "Motel 36" advertises a $36-per-night room rental rate on its sign. As a result, this competitor rents all 80 rooms every day by late
- A firm is planning to manufacture a new product. The sales department estimates that the quantity that an be sold depends on the selling price. As the selling price is increased, the quantity that
- A manufacturing firm has received a contract to assemble 1000units of test equipment in the next year. The firm must decide how to organize its assembly operation. Skilled workers, at $22 per hour
- A grower estimates that if he picks his apple crop now, he will obtain 1000 boxes of apples, which he can sell at $3 per box. However, he thinks his crop will increase by 120 boxes of apples for each
- Bob Johnson decided to purchase a new home. After looking at tracts of new homes, he decided .that a custom-built home was preferable. He hired an architect to prepare the drawings. In due time, the
- Venus Computer can produce 23,000 personal computers a year on its daytime shift. The fixed manufacturing costs per year are $2 million and the total labor cost is $9,109,000. To increase its
- A small machine shop, with 30 hp of connected load, purchases electricity under the following monthly rates (assume any demand charge is included in this schedule):First 50 kw-hr per hp of connected
- Two automatic systems for dispensing maps are being compared by the state highway department. The accompanying breakeven chart of the comparison of these systems (System I vs System II) shows total
- Mr. Sam Spade, the president of Ajax, recently read in a report that a competitor named Bendix has the following relationship between cost and production quantity:c = $3,000,000 - $18,000Q +
- A privately owned summer camp for youngsters has the following data for a 12-week session:Charge per camper ................................$120 per weekFixed costs
- Two new rides are being compared by a local amusement park in terms of their annual operating costs. The two rides are assumed to be able to generate the same level of revenue (and thus the focus on
- Consider the accompanying breakeven graph for an investment, and answer the following questions as they pertain to the graph.(a) Give the equation to describe total revenue for x units per year.(b)
- Quatro Hermanas, Inc. is investigating implementing some new production machinery as part of its operations. Three alternatives have been identified, and they have the following fixed and variable
- Three alternative designs have been created by Snakisco engineers for a new machine that spreads cheese between the crackers in a Snakisco snack. Each machine design has unique total costs (fixed and
- A small company manufactures a certain product. Variable costs are $20 per unit and fixed costs are $10,875. The price-demand relationship for this product is P = -0.25D + 250, where P is the unit
- A painting operation is performed by a production worker at a labor cost of $1.40 per unit. A robot spray painting machine, costing $15,000, would reduce the labor cost to $0.20 per unit. If the
- Company A has fixed expenses of $15,000 per year and each unit of product has a $0.002 variable cost. Company B has fixed expenses of $5000 per year and can produce the same product at a $0.05
- A firm believes the sales volume (S) of its product depends on its unit selling price (P) and can be determined from the equation P = $100 - S. The cost (C) of producing the product is $1000 +
- Consider the situation of owning rental properties that local university students rent from you on an academic year basis. Develop a set of costs that you could classify as recurring and others that
- Define the difference between a "cash cost" and a "book cost." Is engineering economic analysis concerned with both types of cost? Give an example of each, and provide the context in which it is
- In your own words, develop a statement of what the authors mean by "life-cycle costs." Is it important for a firm to be aware of life-cycle costs? Explain why.
- In looking at Figures 2-4 and 2-5, restate in your own words what the authors are trying to get across with these figures. Do you agree that this is an important effect for companies? Explain.Figure
- In the text the authors describe three effects that complicate the process of making estimates to be used in engineering economy analyses. List these three effects and comment on which of these might
- Northern Tundra Telephone (NIT) has received a contract to install emergency phones along a new 100-mile section of the Snow-Moose Turnpike. Fifty emergency phone systems will be installed about 2
- You and your spouse are planning a second honeymoon to the Cayman Islands this summer and would like to have your house painted while you are away. Estimate the total cost of the paint job from the
- You are interested in having a mountain cabin built for weekend trips, vacations, to host family, and perhaps eventually to retire in. After discussing the project with a local contractor, you
- Sung Sam, Inc. is currently designing a new digital camcorder that is projected to have the following per unit costs to manufacture:Cost Categories
- Fifty years ago, Grandma Bell purchased a set of gold plated dinnerware for $55, and last year you inherited it. Unfortunately a house fire at your home destroyed the set. Your insurance company is
- Your boss is the director of reporting for the Athens County Construction Agency (ACCA). It has been his job to track the cost of construction in Athens County. 1\venty-five years ago he created the
- An refinisher of antiques named Constance has been so successful with her small business that she is planning to expand her shop with all new equipment. She is going to start enlarging her shop by
- Refer to Problem 2-26 and now assume the prices for the equipment that Constance wants to replace have not been constant. Use the cost index data for each piece of equipment to update the costs to
- Five years ago, when the relevant cost index was 120, a nuclear centrifuge cost $40,000. The centrifuge had a capacity of separating 1500 gallons of ionized solution per hour. Today, it is desired to
- Padre works for a trade magazine that publishes. lists of Power-Sizing Exponents (PSE) that reflect economies of scale for developing engineering estimates of various types of equipment. Padre has
- Develop an estimate for each of the following situations.(a) The cost of a 500-mile automobile trip, if gasoline is $1 per gallon, vehicle wear and tear is $0.08 per mile, and our vehicle gets 20
- If 200 labor hours were required to produce the 15tunit in a production run and 60 labor hours were required to produce the 7th unit, what was the learning-curve rate during production?
- Rose is a project manager at the civil engineering consulting firm of Sands, Gravel, Concrete, and Waters, Inc. She has been collecting data on a project in which concrete pillars were being
- Sally Statistics is implementing a system of statistical process control (SPC) charts in her factory in an effort to reduce the overall cost of scrapped product. The current cost of scrap is $X per
- Randy Duck out has been asked to develop an estimate of the per-unit selling price (the price that each unit will be sold for) of a new line of hand-crafted booklets that offer excuses for missed
- Develop a statement that expresses the extent to which cost estimating topics also apply to estimating benefits. Provide examples to illustrate.
- On December 1, AI Smith purchased a car for $18,500. He paid $5000 immediately and agreed to pay three additional payments of $6000 each (which includes principal and interest) at the end of 1, 2,
- Bonka Toys is considering a robot that will cost $20,000 to buy. After 7 years its salvage value will be $2000. An overhaul costing $5000 will be needed in year 4. O&M costs will be $2500 per
- Pine Village needs some additional recreation fields. Construction will cost $225,000 and annual O&M expenses are $85,000. The city council estimates that the value of added youth leagues is
- Identify your major cash flows for the current school term as first costs, O&M expenses, salvage values, revenues, overhauls, and so on. Using a week as the time period, draw the cash flow
- In your own words explain the time value of money. From your own life (either now or in a situation -that might occur in your future), provide an example in which the time value of money would be
- Magdalen, Miriam, and Mary June were asked to consider two different cash flows: $500 that they could receive today and $1000 that would be received 3 years from today. Magdalen wanted the $500
- Solve the diagram below for the unknown Q assuming a 10% interest rate.
- The following series of payments will repay a present sum of $5000 at an 8% interest rate. Using single payment factors, what present sum is equivalent to this series of payments at a 10%interest
- A man went to his bank and borrowed $750. He agreed to repay the sum at the end of 3 years, together with the interest at 8% per year. How much will he owe the bank at the end of 3 years?
- The local bank offers to pay 5% interest on savings deposits. In a nearby town, the bank pays 1.25% per 3 month period (quarterly). A man who has $3000 to put in a savings account wonders whether the
- The Apex Company sold a water softener to Marty Smith. The price of the unit was $350. Marty asked for a deferred payment plan, and a contract was written. Under the contract, the buyer could delay
- One thousand dollars is borrowed for one year at an interest rate of 1%per month. If the same sum of money could be borrowed for the same period at an interest rate of 12% per year, how much could be
- A sum of money Q will be received 6 years from now. At 5% annual interest the present worth now of Q is $60. At the same interest rate, what would be the value of Q in 10 years?
- In 1995 an anonymous private collector purchased a painting by Picasso entitled Angel Fernandez De Soto for $29,152,000. The picture depicts Picasso's friend Desoto seated in a Barcelona cafe
- (a) If $100 at Time "0" will be worth $110 a year hence and was $90 a year ago, compute the interest rate for the past year and the interest rate next year.(b) Assume that $90 invested a year ago
- How much must you invest now at 7.9% interest to accumulate $175,000 in 63 years?
- We know that a certain piece of equipment will cost $150,000 in 5 years. How much will it cost today using 10% interest?
- The local garbage company charges $6 a month for garbage collection. It had been their practice to send out bills to their 100,000 customers at the end of each 2-month period. Thus, at the end of
- Sally Stanford is buying an automobile that costs $12,000. She will pay $2000 immediately and the remaining $10,000 in four annual end-of-year principal payments of $2500 each. In addition to the
- For the following diagram, compute the IRR to within 112%.
- For the following diagram, compute the interest rate at which the costs are equivalent to the benefits.
- For the following diagram, compute the rate of return.
- For the following diagram, compute the rate of return on the $3810 investment.
- For the following diagram, compute the rate of return.
- Consider the following cash flow:Year Cash
- What sum of money now is equivalent to $8250 two years hence, if interest is 4% per 6-month period?
- A sum of money invested at 2% per 6-month period (semiannually), will double in amount in approximately how many years?
- The United States recently purchased $1 billion of 30-year zero-coupon bonds from a struggling foreign nation. The bonds yield 41/z% per year interest. The zero-coupon bonds pay no interest during