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engineering economy
Basics Of Engineering Economy 3rd Edition Leland T. Blank, Anthony Tarquin - Solutions
11. 11.56 The first golf-cart chassis off a new fabrication line took 24.5 seconds to paint. If during the first 100 units, a learning rate of 95% is assumed, the paint time for unit 10 is closest to: 1. 20.7 seconds 2. 0.46 minutes 3. 2.75 seconds 4. 15.5 seconds
10. 11.55 If the processing cost decreases by a constant 4% every time the output doubles, the slope parameter of the learning curve is closest to: 1. −0.009 2. −0.059 3. 0.991 4. −1.699
9. 11.54 The delivered-equipment cost for setting up a production and assembly line for high-sensitivity, gas-damped accelerometers is $650,000. If the direct cost and indirect cost factors are 1.82 and 0.31, respectively, and both factors apply to delivered-equipment cost, the total plant cost
8. 11.53 The total plant cost for manufacturing CO2 warning devices that have a compact gas detector and a signaling unit is $1,154,400. If the overall cost factor for the plant was 2.61, the delivered-equipment cost was closest to: 1. $442,300 2. $501,200 3. $593,700 4. $613,900 Page 357
7. 11.52 The equipment for applying specialty coatings that provide a high angle of skid for the paperboard and corrugated box industries has a delivered cost of $390,000. If the overall cost factor for the complete system is 2.96, the total plant cost estimate is approximately: 1. $954,400 2.
6. 11.51 If the cost of a high-speed assembly-line robot is $95,000 and the cost for one with triple the capacity is $160,000, the value of the exponent in the cost-capacity equation is closest to: 1. 0.41 2. 0.47 3. 0.51 4. 0.58
5. 11.50 The exponent in the cost-capacity equation for pumps is 0.64. If the cost for a 200 horsepower (hp) pump with controller was $22,000, the cost of a similar 500 hp pump is closest to: 1. $12,240 2. $28,650 3. $33,780 4. $39,550
4. 11.49 The 20-city Building Cost Skilled Labor Index has a value of 7458.80 now when the skilled labor wage rate is $41.40 per hour. If the skilled labor wage rate was $30.65 per hour 10 years ago, the skilled labor index value at that time was closest to: 1. 10,074.86 2. 7436.12 3. 5522.03 4.
3. 11.48 Corrugated steel pipe with a diameter of 60 inches had a cost of $49.20 per foot in Philadelphia, Pennsylvania, when the materials cost index (MCI) had a value of 2583.52. When the MCI had a value of 2150.00, the cost per foot of the 60-inch pipe was closest to: 1. $40.94 2. $45.94 3.
2. 11.47 A ceramic crucible weighed on an analytical balance yielded a result of 50.3214 g. If the true weight is 50.4100 g, the percentage error is closest to: 1. −2.02% 2. −1.09% 3. −0.18% 4. −1.8% .
1. 11.46 The most accurate measurement is the one that is: 1. Most repeatable 2. Most consistent 3. Most difficult to get 4. Closest to the right answer
7. 11.45 Alamo Power historically allocates IDC for its safety program to generation facilities in cities A and B based on the number of employees. Last year, $300,000 was distributed and the employee count was 800 in city A and 450 in city B. Implementation of the ABC method took place this year
6. 11.44 For many years, Sweet Trucking has allocated truck maintenance and repair (M&R) costs to its three divisions using a traditional basis of number of trucks traveling through repair centers within each region. The allocation, using a blanket IDC rate, is shown for last year when $2.31
5. 11.43 Using an automobile as a cost center and miles traveled as the cost driver, classify the following cost components as either direct or indirect costs: gasoline, garage rental, license plate fee, insurance, tires, inspection fee, oil change. 6. 11.44 For many years, Sweet Trucking has
4. 11.42 The mechanical components division manager asks you to recommend a make/buy decision on a major automotive subassembly that is currently outsourced for a total of $3.9 million this year. This cost is expected to continue rising at a rate of $300,000 per year. For the make option, equipment
3. 11.41 Milford Industries provides medical equipment to oncology and surgical units in major hospitals. Milford allocates indirect costs to 5 departments and redistributes the IDC for Quality Assurance and Engineering to the other 3 departments monthly. The table summarizes IDC allocation and
2. 11.40 Company XSell has a processing department with 10 stations. Because of the nature and use of 3 of these stations, each is considered a separate cost center for IDC allocation. The remaining 7 are grouped as one cost center, CC150. Operating hours are used as the allocation basis for all
1. 11.39 The company you work for currently allocates insurance costs on the basis of cost per direct labor hour. This indirect cost component for the year is budgeted at $36,000. If the annual direct labor hours for departments A, B, and C are expected to be 2000, 8000, and 5000, respectively,
18. 11.38 As an engineer with KBR Construction, you have been asked to estimate the cost per unit to build 125 field-ready office/medical units in the plant for use by the Red Cross. (a) Use a spreadsheet to plot the cost curve on an arithmetic scale in 25-unit increments for a 92% learning rate.
17. 11.37 As an engineer with KBR Construction, you have been asked to predict the completion time per unit to build 125 field-ready office/storage units in the plant. The Red Cross uses the units in international hunger and medical relief efforts. Use a spreadsheet to plot the learning curves on
16. 11.36 The Department of the Navy estimates that the learning rate for shipbuilding is 80%. Assuming the 80% rate applies to nuclear submarines, how long should it take to build the 12th vessel, if the first one took 62 months to complete?Page 355
15. 11.35 Zia Homes is contracted to frame 32 wooden houses of the same design in a new subdivision of 300 homes. The fourth unit took 400 hours, but the company expects to cut about 10% off the time for each replication of the same design. Use the learning curve assumption of a constant decrease
14. 11.34 The delivered-equipment cost for a fully equipped CNC machining system is $4.6 million. The direct cost factor is 1.52 and the indirect cost factor is 0.31. Estimate the total plant cost if the indirect cost factor applies to (a) the delivered-equipment cost only, and (b) the total direct
13. 11.33 A chemical engineer at Tesoro Refining estimated the total cost for a diesel fuel desulfurization system to be $13.39 million. If the direct cost factor is 1.55 and the indirect cost factor is 0.43, what is the total equipment cost? Both factors apply to delivered-equipment cost.
12. 11.32 The total cost for a production plant that supplies hydrogen to the refining industry is estimated at $55.4 million. The equipment is expected to cost $17.8 million. What is the overall cost factor for this type of plant?
11. 11.31 The cost of equipment for manufacturing mineral products in a harsh environment is $2.3 million. If the overall cost factor for this type of facility is 2.25, what is the estimated total plant cost?
10. 11.30 Estimate the current cost of a 1000 horsepower compressor if a 200 horsepower unit cost $160,000 ten years ago and the equipment cost index has increased by 35%. Find the correct exponent in Table 11.4 for the cost-capacity equation.
9. 11.29 In 2020, a military engineer estimated the cost for a classified laser-guided device to be $376,900. At that time, the engineer used cost indices for the years 2012 and 2020, with values of 1302 and 1536, respectively, plus the cost-capacity equation with an exponent value of 0.61. If the
8. 11.28 Your brother operates a small testing business. He wants to purchase a mini-wind tunnel for calibrating vane or hotwire anemometers to complete a contract with a local aircraft parts manufacturer. The cost was $3750 in 2010 when the relevant equipment index was 1457.4. Now the index value
7. 11.27 A 100,000 barrel per day (BPD) fractionation tower cost $1.2 million in 2010. Use the chemical engineering plant cost index (CEPCI) to estimate the cost for a 450,000 BPD plant cost. The index (annual value) is now 607.0, and the exponent in the cost-capacity equation is 0.67.
6. 11.26 The cost of an 8-inch pipe line placed in an open channel in 2016 was $16.13 per LF. An 18-inch pipe cost $22.90 per LF. The crosssectional area of the pipe is considered the “capacity” in the costcapacity equation. (a) Determine the value of the exponent in the costcapacity
5. 11.25 Instead of using a cost-capacity equation for relating project size and construction cost, the Department of Defense uses a size adjustment factor (SAF) that is based on the size relationship ratio (SRR). If an SRR of 2.0 has an SAF of 1.25, what must be the exponent in the costcapacity
4. 11.24 The cost of a 68 m2 falling-film evaporator was 1.52 times the cost of a 30 m2 unit. What exponent value in the cost-capacity equation yielded these results?
3. 11.23 The onsite manager told you that the variable frequency drive (VFD) for a 300 hp motor costs $20,000. Make the best cost estimate possible for the VFD for a 100 hp motor. Since the exponent in the costcapacity equation is not available where you are located, use the average value.
2. 11.22 Use the exponent values in Table 11.4 to estimate the cost for the following equipment to be placed on an offshore drilling platform. 1. The cost of a 125 hp centrifugal pump, if a 200 hp pump costs $28,000. 2. The cost of a 1700 gallon stainless-steel tank, if a 900 gallon tank costs
1. 11.21 A 0.75 million gallon per day (MGD) Induced Draft Packed Tower for air-stripping trihalomethanes from drinking water costs $58,890. Estimate the cost of a 2.0 MGD tower if the exponent in the cost-capacity equation is 0.57.
7. 11.20 The cost of chemical plant equipment was estimated to be $464.5 million when the value of the CEPCI was 567.5. If the cost of similar equipment increased in proportion to the index, what was the value of the index when the cost was $400 million?
6. 11.19 A contractor purchased pump equipment costing $40,000 when the FRED pumps, compressors, and equipment index was 265.2. He remembers purchasing the same equipment for $25,000 some years ago, but he does not remember how many years ago. If the index increased by 2.38% per year since the
5. 11.18 The construction cost index for New York City had a value of 12,381.40 when the value for Pittsburgh was 7341.32. If a construction contractor in Pittsburgh bid on a job that would total $94.0 million in Pittsburgh, determine the equivalent bid he should make in the New York City
4. 11.17 Electropneumatic general-purpose pressure transducers convert supply pressure to regulated output pressure in direct proportion to an electrical input signal. The cost of a transducer was $410 in 2005 when the relevant cost index was at 789.6. If the price increased exactly in proportion
3. 11.16 An engineer who owns a construction company that specializes in large commercial projects noticed that material costs increased at a rate of 1.5% per month over the past 12 months. If a material cost index were created for each month of this year with the value of the index set at 100 at
2. 11.15 A consulting engineering firm wants to make a preliminary cost estimate for the design/construct of an e-commerce warehouse facility in the south of the country. The firm completed a similar project in 2012 that had a construction cost of $68 million, and it wants to use the ENR
1. 11.14 A construction cost index identified as CCX measures the construction cost in each state as a percentage of the national average. From historical data, you discover that the national average construction cost of middle schools is $10,200 per student. (a) If the CCX index for Texas is
13. 11.13 A 130,000-square-foot building is to be constructed on a university campus. You just received two sets of estimates: physical area and furnishings percentages, and the per unit cost factors, as shown below. Estimate the cost of the building and its furnishings. Table Summary: A table
12. 11.12 The Department of Defense uses an area cost factor (ACF) to compensate for variations in construction costs in different parts of the country and world. If a cold storage warehouse cost $1,150,000 in Rapid City, South Dakota, where the ACF is 0.93, and the cost of a similar facility built
11. 11.11 Cost estimates for clinics can be made using costs based on either unit area (square feet) or unit volume (cubic feet). If the unit area cost is $400 per square foot and the average height of the ceilings is 9 feet, what is the unit volume cost?Page 353
10. 11.10 Your parents are in the process of having a new house designed. A total of 150 cubic yards of foundation concrete must be poured for the current 1-story design. The equipment required to pour the concrete by experienced workers is 2 gasoline engine vibrators and 1 concrete pump. The
9. 11.9 The University of Texas Southwestern (UTS) hospital has over 1.3 million square feet and has 532 beds. It cost $800 million to build. Parkland Memorial (PM), Dallas County’s public hospital, has about 2 million square feet and contains 862 beds. If the cost per bed for PM was the same as
8. 11.8 Use the unit cost method to determine the preliminary cost of a guardrail for a hillside highway, if a total of 420 linear feet will be required at a cost of $58.19 per linear foot for material, equipment, and installation.
7. 11.7 A preliminary estimate for the cost of a parking garage can be made using the unit cost method. If the cost per parking space is $19,700, what is the estimated cost for a 600-space garage?
6. 11.6 To evaluate the performance of certified water testing laboratories, the appropriate governing agencies send standard solutions to the labs with concentrations unknown to the lab. In analyzing four samples with actual concentrations of 12.3, 72.2, 130.6, and 210.4 mg/L of total hardness,
5. 11.5 Three friends—Marjorie, Jane, and Joe—went to a county fair and paid a play fee of $10 each to enter a game in which each makes one estimate of the number of chocolate M&Ms® in a glass jar. The one closest within 50 candies or ±5% of the actual count wins $100. Assuming no other
4. 11.4 An industrial engineer collected data about the time required by various teams to assemble a 5-ton residential air-conditioning unit. Each team was evaluated five times. Team A had times of 1.5, 1.4, 1.2, 1.4, and 1.2 hours. Team B had times of 1.5, 1.3, 1.1, 1.1, and 1.3 hours. Team C had
3. 11.3 Total solids measurements from samples of sludge taken from a belt filter press yielded the following results: 13.2%, 14.6%, and 13.4%. If the actual value was 13.5%, what was the percentage error of the average of the total solids measurements? Is this an under- or overestimate?
2. 11.2 Explain the difference between a cost estimate that is accurate and one that is precise.
1. 11.1 Classify the following cost elements as first-cost (FC) components or annual operating cost (AOC) components for a piece of equipment on the shop floor: supplies, insurance, equipment cost, utility cost, installation, delivery charges, labor cost.
7. Allocate indirect cost using traditional indirect cost rates and the Activity-Based Costing (ABC) method. Indirect costs
6. Estimate time and cost using the learning curve relationship.Learning curve
5. Estimate total plant cost using the factor method. Factor method
4. Estimate the cost of a component, system, or plant by using a costcapacity equation. Cost-capacity equations
3. Use a cost index to estimate present cost based on historic data. Cost indexes
2. Use a unit cost factor to estimate preliminary cost. Unit method
1. Explain the difference between estimation precision and accuracy; describe different approaches to cost estimation and describe a work breakdown structure. Approaches and accuracy
12. 10.54 (Spreadsheet exercise, if instructed) You own and operate Braxon Consultants. A new CNC system will cost $350,000 now, have an AOC of $60,000, produce revenue estimated at $200,000 per year, have a useful life of 10 years, and bring a salvage of 20% of first cost. You expect a real MARR
11. 10.53 For a real interest rate of 1% per month and an inflation rate of 1% per month, the nominal inflated interest rate per year is closest to: 1. 2% 2. 12% 3. 24% 4. 24.12%
10. 10.52 If the inflation rate is 8% per year, the purchasing power 10 years from now of $20,000 future dollars with respect to today’s (CV) dollars is closest to: 1. $8178 2. $8423 3. $8900 4. $9270
9. 10.51 If you are promised $65,000 five years from now, the present worth of the purchasing power today in CV dollars at a real ROR of 4% per year, when the inflation rate is 3% per year, is closest to: 1. $27,600 2. $29,800 3. $33,100 4. $46,100
8. 10.50 Your favorite pickup is a well-equipped F-150 truck. The cost 4 years ago was $29,350. If the cost increased only by the inflation rate and the price today is $35,675, the inflation rate over the 4-year period was closest to: 1. 3% 2. 4% 3. 5% 4. 6%
7. 10.49 Abby made an investment of only $1000 25 years ago. The amount available to her 10 years from now at the reasonable market ROR of 5% per year, given an inflation rate of 2% per year, is closest to: 1. $3085 2. $4430 3. $5510 4. $15,000
6. 10.48 Construction equipment has a cost today of $40,000. If its cost has increased only by the inflation rate of 6% per year when the market interest rate was 10% per year, its cost 10 years ago was closest to: 1. $15,420 2. $22,300 3. $27,405 4. $71,630
5. 10.47 If the market rate today on foreign stock investments is 12% per year and the inflation rate is 5% per year, the number of future dollars seven years in the future that will have the same purchasing power as $2000 now is closest to:Page 326 1. $905 2. $1421 3. $2810 4. $4420
4. $70,080 4. 10.46 A used Porsche 911, your favorite European sports car, has a cost today of $140,000. Because of high demand, its cost is expected to increase by 2X the inflation rate. If the inflation rate is 3% and the market interest rate is 8% per year, the cost 4 years from now is estimated
3. 10.45 A modern 3D printer has a cost today of $20,000. The future worth of an equivalent printer 10 years from now at an inflation rate of 4% and an interest rate of 9% per year is closest to: 1. $29,000 2. $47,300 3. $67,900
2. 10.44 If the market ROR is 16% per year when the real ROR is 9% per year, the inflation rate is closest to: 1. 6.4% 2. 7% 3. 9% 4. 15.6%
1. 10.43 For a market interest rate of 12% per year and an inflation rate of 7% per year, the real interest rate per year is closest to: 1. 4.7% 2. 7% 3. 12% 4. 19.8%
6. 10.42 Assume the market interest rate is 8% per year and inflation averages 4% per year. (a) Calculate the perpetual equivalent annual worth in future dollars for years 1 through ∞ for an income of $50,000 now and $5000 per year thereafter. (b) If the amounts had been quoted in CV dollars,
5. 10.41 A multinational software security firm is planning an overseas expansion 3 years from now that will cost $50 million of today’s dollars. Due to a robust economy in Europe in this area, the cost is expected to increase by 15% per year in each of the next 3 years. Assuming the inflation
4. 10.40 A European-based cattle genetics engineering research lab is planning for a major expenditure on research equipment. The lab needs $6 million of CV dollars so it can make the acquisition 4 years from now. The inflation rate is steady at 5% per year. (a) How many future dollars will be
3. 10.39 In wisely planning for your retirement, you invest $25,000 per year for 20 years into a 401K tax-deferred account. Assume you make a real return of 10% per year when the inflation rate averages 2.8% per year. (a) How many future dollars will you have in the account immediately after your
14. 10.36 Your project manager asks you to evaluate alternatives A and B on the basis of their PW values using a real MARR of 10% per year and an inflation rate of 3% per year (a) without any adjustment for inflation, and (b) with inflation considered. Also, write the spreadsheet functions that
13. 10.35 Hammond Enterprises offers an e-commerce service that is managed inhouse at an equivalent AW of $3.50 million based on past NCF values. An international, outsourcing contractor can provide improved services for a guaranteed 5-year period starting at $4.5 million per year with an annual
12. 10.34 To retire at a decent age and move to Hawaii, an engineer plans to trust her account to an investment firm that promises to make a real ROR of 10% per year, after commissions and fees. Inflation has a historic rate of 4% per year and the account balance is currently $422,000. (a) To
11. 10.33 An engineer planning for her son’s college education made deposits into a high-risk stock hedge fund every time she earned extra money from side consulting jobs. The deposits and their timing are as follows: Table Summary: A table divided into 2 columns shows the number of years and
10. 10.32 The company you work for signed a contract to control access to company grounds and corporate offices. The contract was for $140,000 the first year, renewable each year for up to a total of 5 years at the same cost, plus a percentage increase equal to the inflation rate for the preceding
9. 10.31 If the inflation rate is 6% per year and you want to earn a real return of 10% per year, how many future dollars must you receive 10 years from now for an investment of $10,000 today?
8. 10.30 Timken Roller Bearing is a manufacturer of seamless tubes for drill bit collars. The company is planning to add larger capacity robotic arms to one of its assembly lines 3 years from now. If done now, the cost of the equipment with installation will be $2.4 million. If the company’s real
7. 10.29 Five years ago, an industrial engineer deposited $10,000 into an account and left it undisturbed through now. The account is now worth $25,000. (a) What was the overall ROR during that time? (b) If the inflation over 5 years was 4% per year, what was the real ROR? (c) What is the
6. 10.28 (a) How many future dollars will you need 5 years from now to maintain the buying power of $50,000 now, if the deflation rate is 3% per year? (b) Why is persistent deflation a potential danger to the economic health of a country?
5. 10.27 To cover themselves from lawsuits, most medical doctors in private practice carry liability insurance. Assume the annual premium for liability insurance costs $40,000 today for a coverage of $25 million. (a) If the premium increases only by the inflation rate of 6% per year when the market
4. 10.26 The strategic plan of a solar energy company that manufactures high-efficiency solar cells includes an expansion of its physical plant in 4 years. As the engineer in charge of facilities, you estimate that the expenditure required now is $8,000,000, but in 4 years the cost will be higher
3. 10.25 Well-managed companies set aside funds to pay for emergencies that inevitably arise in the course of doing business. A commercial solid waste recycling and disposal company has placed 1% of its after-tax income into such a fund for 5 years. The market rate of return averages 12% per year
2. 10.24 In order to encourage its employees to save money for retirement, a large pharmaceutical company offers a guaranteed rate of return of 10% per year, no matter what the going market rate might be. If you, as a newly-hired engineer, invest $5000 per year for 10 years when the inflation rate
1. 10.23 A company that makes hand and power tools has developed a fund of $280,000 now for possibly replacing its thermoforming equipment. If the replacement isn’t needed for 3 years, how much will the company have available provided the fund earns at the market rate of 10% per year when the
11. 10.22 You have been offered the opportunity to invest in one of the two programs outlined below: railroads or olive trees. Select one on the basis of their capitalized costs with adjustments made for inflation. The M&O and proceeds are one investor’s share of the annual costs and projected
10. 10.21 May-Kit Metal Fabricators, Inc. is located in a relatively high inflation country. Two machines under consideration have estimated cash flows as shown. (a) Use a PW analysis to select one machine at i = 15% and f = 12% per year. (b) (Spreadsheet exercise) The fab manager believes the AOC
9. 10.20 (a) Find the present worth of the following estimated cash flows. As indicated, some are expressed in future (then-current) dollars and others in current-value (today’s) dollars. Use a real interest rate of 10% per year and an inflation rate of 6% per year. (b) (Spreadsheet exercise)
8. 10.19 The makers of Lifestraw, a filter designed to allow the user to drink water safely from a stream, have a financial decision to make. Implementing an automated assembly process will cost $5000 per year for the next 6 years. The interest rate is 15% per year and the inflation rate is 5% per
7. 10.18 Such a lucky girl! Helene was just told that she has inherited her great-grandfather’s entire hedge fund investment account that contained $3 million. If he started the account 50 years ago with a single deposit and never added even a single dollar to the account, how much did he
6. 10.17 The manager of the Pick ‘N’ Pak Food store is trying to determine how much can be spent now to avoid spending an estimated $10,000 on freezer equipment 2 years from now. If the interest rate is 1.5% per month and the inflation rate is 1% per month, what is this maximum amount? Solve
5. 10.16 How much money can the Eastman Land and Cattle Company afford to spend now for a tractor trailer in lieu of spending $65,000 three years from now, if the interest rate is 13% per year and the inflation rate is 7% per year? Solve (a) by factors, and (b) a single-cell spreadsheet function.
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