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Engineering economy 7th Edition Leland Blank, Anthony Tarquin - Solutions
Profits from recycling paper, cardboard, aluminum, and glass at a liberal arts college have increased at a constant rate of $1100 in each of the last 3 years. If this year's profit (end of year 1) is expected to be $6000 and the profit trend continues through year 5(a) What will the profit be at
A report by the Government Accountability Office (GAO) shows that the GAO expects the U.S. Postal Service to lose a record $7 billion at the end of this year, and if the business model is not changed, the losses will total $241 billion by the end of year 10. If the losses increase uniformly over
Rolled ball screws are suitable for high-precision applications such as water jet cutting. Their total manufacturing cost is expected to decrease because of increased productivity, as shown in the table. Determine the equivalent annual cost at an interest rate of 8% peryear.
Western Hydra Systems makes a panel milling machine with a 2.7-m-diameter milling head that emits low vibration and processes stress-relieved aluminum panels measuring up to 6000 mm long.The company wants to borrow money for a new production/warehouse facility. If the company offers to repay the
GKX Industries expects sales of its hydraulic seals (in inch and metric sizes) to increase according to the cash flow sequence $70 + 4 k, where k is in years and cash flow is in $1000.(a) What is the amount of the cash flow in year 3?(b) What is the future worth of the entire cash flow series in
For the cash flows below, determine the amount in year 1, if the annual worth in years 1 through 9 is $601.17 and the interest rate is 10% peryear.
Apple Computer wants to have $2.1 billion available 5 years from now to finance production of a handheld "electronic brain" that, based on your behavior, will learn how to control nearly all the electronic devices in your home, such as the thermostat, coffee pot, TV, and sprinkler system. The
Tacozza Electric, which manufactures brush dc servomotors, budgeted $75,000 per year to pay for certain components over the next 5 years. If the company expects to spend $15,000 in year 1, how much of a uniform (arithmetic) increase each year is the company expecting in the cost of this part?
There are no tables in the back of your book for the geometric gradient series factors. Calculate the first two annual worth factor values, that is, A values for n = 1 and 2, that would be in a 10% interest table for a growth rate of 4% per year.
Determine the present worth of a geometric gradient series with a cash flow of $50,000 in year 1 and increases of 6% each year through year 8. The interest rate is 10% per year.
Determine the difference in the present worth values of the following two commodity contracts at an interest rate of 8% per year.Contract 1 has a cost of $10,000 in year 1; costs will escalate at a rate of 4% per year for 10 years.Contract 2 has the same cost in year 1, but costs will escalate at
El Paso Water Utilities (EPWU) purchases surface water for treatment and distribution to EPWU customers from El Paso County Water Improvement District during the irrigation season. A new contract between the two entities resulted in a reduction in future price increases in the cost of the water
Gesky Industrial Products manufactures brushless blowers for boilers, food service equipment, kilns, and fuel cells. The company borrowed $18,000,000 for a plant expansion and repaid the loan in seven annual payments of $3,576,420, with the first payment made 1 year after the company received the
If the value of Jane's retirement portfolio increased from $170,000 to $813,000 over a 1 5-year period, with no deposits made to the account over that period, what annual rate of return did she make?
A person's credit score is important in determining the interest rate on a home mortgage. According to Consumer Credit Counseling Service, a homeowner with a $100,000 mortgage and a 520 credit score will pay $110,325 more in interest charges over the life of a 30-year loan than a homeowner with the
During a period when the real estate market in Phoenix, Arizona, was undergoing a significant downturn, CSM Consulting Engineers made an agreement with a distressed seller to purchase an office building under the following terms: total price of $1.2 million with a down payment of $200,000 now and
A start-up company that makes hydraulic seals borrowed $800,000 to expand its packaging and shipping facility. The contract required the company to repay the investors through an innovative mechanism called faux dividends, a series of uniform annual payments over a fixed period of time. If the
Bessimer Electronics manufactures addressable actuators in one of its Maquiladora plants in Mexico. The company believes that by investing $24,000 each year in years 1, 2, and 3, it will avoid spending $87,360 in year 3. If the company does make the annual investments, what rate of return will it
UV curable epoxy resins are used in sealing, in gap filling, and as a clear coating. Your boss saw a report submitted by the chief financial officer (CFO) that said the equivalent annual worth of maintaining the equipment used in producing the resins was $48,436 over the last 5 years. The report
Acme Bricks, a masonry products company, wants to have $600,000 on hand before it invests in new conveyors, trucks, and other equipment. If the company sets aside $80,000 per year in an account that increases in value at a rate of 15% per year, how many years will it be before Acme can purchase the
An engineer who was contemplating retirement had $1.6 million in his investment portfolio. However, a severe recession caused his portfolio to decrease to only 55% of the original amount, so he kept working. If he was able to invest his money at a rate of return of 9% per year after the recession
You own a small engineering consulting company. If you invest $200,000 of the company's money in a natural gas well that is expected to provide income of $29,000 per year, how long must the well produce at that rate in order to get the money back plus a rate of return of 10% per year?
A perceptive engineer started saving for her retirement 15 years ago by diligently saving $18,000 each year through the present time. She invested in a stock fund that averaged a 12% rate of return over that period. If she makes the same annual investment and gets the same rate of return in the
A mechanical engineering graduate who wanted to have his own business borrowed $350,000 from his father as start-up money. Because he was family, his father charged interest at only 4% per year. If the engineer was able to pay his father $15,000 in year 1, $36,700 in year 2, and amounts increasing
The energy costs of a company involved in powder coating of outdoor furniture are expected to increase at a rate of $400 per year. The cost at the end of the next year (year 1) is expected to be $13,000. How many years will it be from now before the equivalent annual cost is $16,000 per year, if
In cleaning out some files that were left behind by the engineer who preceded you in your current job, you found an old report that had a calculation for the present worth of certain maintenance costs for state highways. The report contained the following equation (with cost in $1 million):12{1 –
The equivalent annual worth of an increasing arithmetic gradient is $135,300. If the cash flow in year 1 is $35,000 and the gradient amount is $19,000, what is the value of n at an interest rate of 10% per year?
You are told that the present worth of an increasing geometric gradient is $88,146. If the cash flow in year 1 is $25,000 and the gradient increase is 18% per year, what is the value of n? The interest rate is 10% per year.
The amount of money that Diamond Systems can spend now for improving productivity in lieu of spending $30,000 three years from now at an interest rate of 12% per year is closest to:(a) $15,700 (b) $17,800 (c) $19,300 (d) $21,350
A manufacturing company spent $30,000 on a new conveyor belt. If the conveyor belt resulted in cost savings of $4200 per year, the length of time it would take for the company to recover its investment at 8% per year is closest to:(a) Less than 9 years (b) 9 to 10 years (c) 11 to 12 years (d) Over
Multiple Choice Questions1. Levi Strauss has some of its jeans stone-washed under a contract with independent U.S. Garment Corp. If U.S. Garment's operating cost per machine is $22,000 for year 1 and increases by a constant $1000 per year through year 5, what is the equivalent uniform annual cost
A small construction company is considering the purchase of a used bulldozer for $61,000. If the company purchases the dozer now, the equivalent future amount in year 4 that the company is paying for the dozer at 4% per year interest is closest to:(a) $52,143 (b) $65,461 (c) $71,365 (d) Over $72,000
The cost of lighting and maintaining the tallest smokestack in the United States (at a shuttered ASARCO refinery) is $90,000 per year. At an interest rate of 10% per year, the present worth of maintaining the smokestack for 10 years is closest to:(a) $1,015,000 (b) $894,000 (c) $712,000 (d) $553,000
An enthusiastic new engineering graduate plans to start a consulting firm by borrowing $100,000 at 10% per year interest. The loan payment each year to pay off the loan in 7 years is closest to:(a) $18,745 (b) $20,540 (c) $22,960 (d) $23,450
An engineer who believed in "save now and play later" wanted to retire in 20 years with $1.5 million.At 10% per year interest, to reach the $1.5 million goal, starting 1 year from now, the engineer must annually invest:(a) $26,190 (b) $28,190 (c) $49,350 (d) $89,680
The cost of a border fence is $3 million per mile. If the life of such a fence is assumed to be 10 years, the equivalent annual cost of a 10-mile-long fence at an interest rate of 10% per year is closest to:(a) $3.6 million (b) $4.2 million (c) $4.9 million (d) Over $5.0 million
An investment of $75,000 in equipment that will reduce the time for machining self-locking fasteners will save $20,000 per year. At an interest rate of 10% per year, the number of years required to recover the initial investment is closest to:(a) 6 years(b) 5 years(c) 4 years(d) 3 years
The number of years required for an account to accumulate $650,000 if Ralph deposits $50,000 each year and the account earns interest at a rate of 6% per year is closest to:(a) 13 years(b) 12 years(c) 11 years(d) 10 years
Aero Serve, Inc., manufactures cleaning nozzles for reverse-pulse jet dust collectors. The company spent $40,000 on a production control system that will increase profits by $13,400 per year for 5 years. The rate of return per year on the investment is closest to:(a) 20% (b) 18% (c) 16% (d) Less
Energy costs for a green chemical treatment have been increasing uniformly for 5 years. If the cost in year 1 was $26,000 and it increased by $2000 per year through year 5, the present worth of the costs at an interest rate of 10% per year is closest to:(a) $102,900 (b) $112,300 (c) $122,100 (d)
In planning for your retirement, you expect to save $5000 in year 1, $6000 in year 2, and amounts increasing by $1000 each year through year 20. If your investments earn 10% per year, the amount you will have at the end of year 20 is closest to:(a) $242,568 (b) $355,407(c) $597,975 (d) $659,125
Income from a precious metals mining operation has been decreasing uniformly for 5 years. If income in year 1 was $300,000 and it decreased by $30,000 per year through year 4, the annual worth of the income at 10% per year is closest to:(a) $310,500 (b) $258,600 (c) $203,900 (d) $164,800
If you are able to save $5000 in year 1, $5150 in year 2, and amounts increasing by 3% each year through year 20, the amount you will have at the end of year 20 at 10% per year interest is closest to:(a) $60,810 (b) $102,250 (c) $351,500 (d) Over $410,000
During the last week, Sundara has read about different situations that involve money, interest rate, and different amounts of time. She has gotten interested in the major effects that time and interest rates have on the amount of money necessary to do things and the significant growth in the amount
Industrial Electric Services has a contract with the U.S. Embassy in Mexico to provide maintenance for scanners and other devices in the building. If the first payment of $12,000 is received now, what is the present worth of the contract, provided the company will receive a total of 10 payments
Civil engineering consulting firms that provide services to outlying communities are vulnerable to a number of factors that affect the financial condition of the communities, such as bond issues and real estate developments. A small consulting firm entered into a fixed-price contract with a large
The net cash flow associated with development and sale of a new product is shown. Determine the present worth at an interest rate of 12% per year.The cash flow is in $1000 units. Show(a) Hand(b) Spreadsheetsolutions.
Standby power for water utility pumps and other electrical devices is provided by diesel-powered generators. As an alternative, the utility can use natural gas to power the generators, but it will be a few years before the gas is available at remote sites. The utility estimates that by switching to
Find the present worth at i = 10% per year for the cash flow series shownbelow.
The subsidized cost of producing water at the El Paso Water Utilities (EPWU) Kay Bailey Hutchison (KBH) desalting plant is $1.56 per 1000 gallons.Under a contract that EPWU has with Fort Bliss, the utility sells water to the Army post at a discounted price of $1.28 per 1000 gallons. (The KBH plant
The rising cost of athletic programs at major universities has induced college presidents and athletic directors to devise innovative ways to finance cash strapped sports programs. One of the latest schemes for big-time athletics is the "sports mortgage." At the University of Kansas, Jayhawk fans
The cash flow associated with making self-locking fasteners is shown below. Determine the net present worth (year 0) at an interest rate of 10% peryear.
Beckman Technologies, a relatively small manufacturer of precision laboratory equipment, borrowed $2 million to renovate one of its testing labs. In an effort to pay off the loan quickly, the company made four payments in years 1 through 4, with each payment being twice as large as the preceding
Revenue from the sale of ergonomic hand tools was $300,000 in years 1 through 4 and $465,000 in years 5 through 9. Determine the equivalent annual revenue in years 1 through 9 at an interest rate of 10% per year.
Two engineering graduates who recently got married are planning for their early retirement 20 years from now. They believe that they will need $2,000,000 in year 20. Their plan is to live on one of their salaries and invest the other. They already have $25,000 in their investment account.(a) How
Costs associated with the manufacture of miniature high-sensitivity piezoresistive pressure transducers are $73,000 per year. A clever industrial engineer found that by spending $16,000 now to reconfigure the production line and reprogram two of the robotic arms, the cost will go down to $58,000
Calculate the equivalent annual cost in years 1 through 9 of the following series of disbursements. Use an interest rate of 10% per year. Show(a) Hand(b) Spreadsheetsolutions.
For the cash flows below, find the value of x that makes the equivalent annual worth in years 1 through 7 equal to $300 per year. Use an interest rate of 10% per year. Show solutions(a) By hand(b) Using the Goal Seektool.
Precision Instruments, Inc. manufactures high sensitivity mini accelerometers designed for modal analysis testing. The company borrowed $10,000,000 with the understanding that it would make a $2,000,000 payment at the end of year 1 and then makes equal annual payments in years 2 through 5 to pay
A construction management company is examining its cash flow requirements for the next 7 years. The company expects to replace office machines and computer equipment at various times over the 7-year planning period. Specifically, the company expects to spend $6000 one year from now, $9000 three
Find the equivalent annual worth for the cash flows shown, using an interest rate of 12% per year. Monetary units are$1000.
Calculate the net annual worth in years 1 through 10 of the following series of incomes and expenses, if the interest rate is 10% peryear.
The city of El Paso gave the El Paso Tennis and Swim Club a 20-year lease to continue using a 10-acre arroyo park for its facilities. The club will pay $1000 per year plus make $350,000 in improvements at the park. In addition, the club will open its tennis courts to the public from 1 to 5 P.M.
Stadium Capital Financing Group is a Chicago company that conceived the so-called sports mortgage wherein fans agree to pay a relatively large amount of money over a 10- to 30-year period for the right to buy top seats for football games for up to the next 50 years. In return, season ticket prices
The expansion plans of Acme Granite, Stone & Brick call for the company to add capacity for a new product in 5 years. The company wants to have $360,000 available before it announces the product. If the company sets aside $55,000 now and $90,000 in year 2, what uniform annual amount will it have to
For the cash flows shown, calculate the future worth in year 8 using i = 10% peryear.
Assume you plan to start an annuity plan by making your first deposit now. If you make annual deposits of a uniform amount A into the account that earns interest at a rate of 7% per year, how many years from now will it be until the value of the account is equal to 10 times the value of a single
New actuator element technology enables engineers to simulate complex computer-controlled movements in any direction. If the technology results in cost savings in the design of amusement park rides, what is the future worth in year 5 of savings of $70,000 now and $20,000 per year in years 1 through
Austin Utilities is planning to install solar panels to provide some of the electricity for its groundwater desalting plant. The project would be done in two phases. The first phase will cost $4 million in year 1 and $5 million in year 2. This investment will result in energy savings (phase 2) of
For the cash flow diagram shown, determine the value of W that will render the equivalent future worth in year 8 equal to $–500 at an interest rate of 10% peryear.
For the cash flows shown in the diagram, determine the value of x that will make the future worth in year 8 equal to$–70,000.
A small oil company is planning to replace its Coriolis flow-meters with Emerson Hastelloy flow-meters. The replacement process will cost the company $50,000 three years from now. How much money must the company set aside each year beginning now (year 0) in order to have the total amount available
A company that manufactures air-operated drain valve assemblies budgeted $74,000 per year to pay for plastic components over a 5-year period. If the company spent only $42,000 in year 1, what uniform annual amount should the company expect to spend in each of the next 4 years to expend the entire
A recently hired chief executive officer wants to reduce future production costs to improve the company's earnings, thereby increasing the value of the company's stock. The plan is to invest $40,000 now and $40,000 in each of the next 2 years to improve productivity. By how much must annual costs
Use the cash flow diagram to determine the single amount of money Q4 in year 4 that is equivalent to all of the cash flows shown. Use i = 10% peryear.
For the following series of income and expenses, find the equivalent value in year 9 at an interest rate of 12% per year. Show(a) Hand(b) Spreadsheetsolutions.
An investor just purchased property under a unique financing agreement with the seller. The contract price is $1.6 million. The payment plan is Z dollars now, 2 Z dollars in year 2, and 3 Z dollars in years 3 through 5. If the interest rate on the transaction is 10% per year, how much is the
A foursome of entrepreneurial electrical engineering graduates has a plan to start a new solar power equipment company based on STE (solar thermal electric) technology. They have recently approached a group of investors with their idea and asked for a loan of $5 million. Within the agreement, the
Find the present worth in year 0 for the cash flows shown. Let i = 10% peryear.
For the cash flows shown, determine the present worth in year 0, if the interest rate is 12% peryear.
A low-cost noncontact temperature measuring tool may be able to identify railroad car wheels that are in need of repair long before a costly structural failure occurs. If BNF Railroad saves $100,000 in years 1 through 5, $110,000 in year 6, and constant amounts increasing by $10,000 each year
Determine the present worth in year 0 of the cash flows shown at an interest rate of 15% peryear.
The Pedernales Electric Cooperative estimates that the present worth now of income from an investment in renewable energy sources is $12,475,000.There will be no income in years 1 and 2, but in year 3 income will be $250,000, and thereafter it will increase according to an arithmetic gradient
Calculate the annual cost in years 1 through 9 of the following series of disbursements. Use an interest rate of 10% peryear.
The cost associated with manufacturing high performance lubricants closely follows the cost of crude oil. For the last 10 years, a small, independent refiner had a cost of $3.4 million in years 1 through 3, after which the cost increased by 3% per year through this year. Determine the current
Find the future worth in year 10 of $50,000 in year 0 and amounts increasing by 15% per year through year 10 at an interest rate of 10% per year.
The cost of tuition at public universities has been steadily increasing for many years. One Midwestern university pledged to keep the tuition constant for 4 years for all students who finished in the top 3% of their class. One such student who liked research planned to enroll at the university and
A private equity firm purchased a cable company and assumed the company's debt as part of the transaction. The deal was structured such that the private equity firm received $3 million immediately after the deal was closed (in year 0) through the sale of some assets. This year (year 1) income was
Calculate the present worth in year 0 of a series of cash flows that starts at $150,000 in year 0 and increases by 10% per year through year 5. Assume i = 10% per year.
For the cash flows shown, determine the value of G such that the present worth in year 0 equals $16,000 at an interest rate of 10% peryear.
For these cash flows, find the equivalent annual worth in years 1 through 7 at an interest rate of 10% peryear.
The pumping cost for delivering water from the Ohio River to Wheeling Steel for cooling hot rolled steel was $1.8 million for the first 3 years.An effective energy conservation program resulted in a reduced cost to $1.77 million in year 4, $1.74 million in year 5, and amounts decreasing by $30,000
Income from the mining of mineral deposits usually decreases as the resource becomes more difficult to extract. Determine the future worth in year 10 of a mineral lease that yielded income of $14,000 in years 1 through 4 and then amounts that decreased by 5% per year through year 10.Use an interest
For the cash flows shown in the diagram, determine the future worth in year 8 at an interest rate of 10% peryear.
Income from the sale of application software (apps) is usually constant for several years and then decreases quite rapidly as the market gets close to saturation. Income from one smart phone app was $38,000 in years 1 through 3 and then decreased geometrically by 15% per year through year 7.
Determine the future worth in year 10 of a cash flow series that starts in year 0 at $100,000 and decreases by 12% per year. Use an interest rate of 12% per year.
Multiple Choice Questions1. A manufacturer of toilet flush valves wants to have $1,900,000 available 3 years from now so that a new product line can be initiated. If the company plans to deposit money each year, starting now, the equation that represents the deposit each year at 8% per year
The amount of money a person must deposit 3 years from now in order to withdraw $10,000 per year for 10 years beginning 15 years from now at an interest rate of 10% per year is closest to:(a) $15,500 (b) $17,200(c) $19,300 (d) $21,500
Cindy wants to deposit money for 4 consecutive years starting 3 years from now so she can withdraw $50,000 twelve years from now. Assume the interest rate is 8% per year. The annual deposit is closest to:(a) $6990(b) $7670(c) $8530(d) $10,490
The net present worth in year 0 of the following series of incomes and expenses at 8% per year is closest to:(a) $14,300(b) $15,500(c) $16,100(d)$16,500
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