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engineering economy
Basics Of Engineering Economy 2nd Edition Leland T. Blank, Anthony Tarquin - Solutions
Estimates have been presented to Holly Farms, which is considering two environmental chambers for a project that will detail laboratory confirmations of on-line bacteria tests in chicken meat for the presence of E. coli 0157:H7 and Listeriamonocytogenes.(a) If the project will last for 6 years and
The TT Racing and Performance Motor Corporation wishes to evaluate two alternative machines for NASCAR motor tune-ups. (a) Use the AW method at 9% per year to select the better alternative.(b) Use spreadsheet single-cell functions to find the better alternative.
Equipment needed at a Valero Corporation refinery for the conversion of corn stock to ethanol, a cleaner burning gasoline additive, will cost$175,000 and have net cash flows of $35,000 the first year, increasing by $10,000 per year over the life of 5 years. (a) Use a spreadsheet (and tabulated
BP Oil is in the process of replacing sections of its Prudhoe Bay, Alaska oil transit pipeline. This will reduce corrosion problems, while allowing higher line pressures and flow rates to downstream processing facilities. The installed cost is expected to be about $170 million. Alaska imposes a
An environmental engineer is considering three methods for disposing of a non-hazardous chemical sludge: land application, fluidized-bed incineration, and private disposal contract. The estimates for each method are below. (a) Determine which has the least cost on the basis of an annual worth
One of two methods will produce solar panels for electric power generation. Method 1 will have an initial cost of $550,000, an annual operating cost of$160,000 per year, and a $125,000 salvage value after its three-year life. Method 2 will cost$830,000 with an annual operating cost of$120,000, and
An engineer is considering two different liners for an evaporation pond that will receive salty concentrate from a brackish water desalting plant. A plastic liner will cost $0.90 per square foot and will have to be replaced in 20 years when precipitated solids have to be removed from the pond using
A public water utility is replacing its service trucks with more fuel-efficient vehicles. Two types of trucks are under consideration: Type 1 uses“start-stop” technology that turns the engine off when the vehicle comes to a halt in traffic or at a stop light. These trucks will get 22 miles per
Two machines with the following cost estimates are under consideration for a dishwasher assembly process. Using an interest rate of 10% per year, determine which alternative should be selected on the basis of an annual worth analysis.
A 600-ton press used to produce compositematerial fuel cell components for automobiles using proton exchange membrane (PEM) technology can reduce the weight of enclosure parts up to 75%. At MARR 12% per year, calculate(a) capital recovery and (b) annual revenue required. (c) Solve using a
A small commercial building contractor purchased a used crane 2 years ago for $60,000. Its operating cost was $2500 in month one, $2550 in month two, and amounts increasing by $50 per month through the end of year two (now). If the crane was sold for $48,000 now, what was its equivalent monthly
A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows below. At an interest rate of 10% per year, what is the equivalent annual cost of the project?Find the AW value using (a) tabulated factors,(b) calculator functions, and (c) a
In an effort to retain troops who are proficient with weapons and who can speak the languages of Middle Eastern countries, the Pentagon offered bonuses of $150,000 to specialized personnel who were near or already eligible for retirement. If 400 enlisted personnel accepted the bonus in year one,
Toro Company is expanding its U.S.-based plastic molding plant as it continues to transfer work from Juarez, Mexico contractors. The plant bought a$1.1 million precision injection molding machine to make plastic parts for Toro lawn mowers, trimmers, and snow blowers. The plant also spent$275,000
A small metal plating company wants to become involved in electronic commerce. A modest e-commerce package is available for $20,000.Semiannual updates and site maintenance will cost$300. The salvage value of the package is estimated to be $1500 after 3 years. If the company wants to recover its
U.S. Steel is planning a plant expansion to produce austenitic, precipitation-hardened, duplex and martensitic stainless steel round bar (as well as various nickels) that is expected to cost $13 million now and another $10 million 1 year from now.If total operating costs will be $1.2 million per
Environmental recovery company RexChem Partners plans to finance a site reclamation project that will require a 4-year cleanup period. The company will borrow $3.8 million now to finance the project.How much will the company have to receive in annual payments for 4 years, provided it will also
NRG Energy plans to construct a giant solar plant in Santa Teresa, NM to supply electricity to 30,000 southern NM and western TX homes. The plant will have 390,000 heliostats to concentrate sunlight onto 32 water towers to generate steam.NRG will spend $560 million in constructing the plant and
Heyden Motion Solutions ordered $7 million worth of seamless tubes for manufacturing their high performance and precision linear motion products. If their annual operating costs are$860,000 per year, how much annual revenue is required over a 3-year planning period to recover the initial investment
The number of life cycles for each alternative when performing a present worth evaluation based on the LCM for equal service is:a. 2 for each alternativeb. 1 for each alternativec. 3 for alternative 1; 4 for alternative 2d. 4 for alternative 1; 3 for alternative 2
The relation that correctly calculates the present worth of alternative 2 when comparing it to alternative 1 is:a. 65,000 15,000(PA,12%,12) 25,000(PF,12%,8) 25,000(PF,12%,12)b. 65,000 15,000(PA,12%,4) 25,000(PF,12%,4)c. 65,000 15,000(PA,12%,12) 25,000(PF,12%,12)d. 65,000
A corporate bond has a face value of $10,000, a bond interest rate of 8% per year payable semiannually, and a maturity date of 20 years from now.If a person purchases the bond for $9000 when the interest rate in the market place is 8% per year compounded semiannually, the size and frequency of the
A grateful donor wishes to start an endowment at her alma mater that will provide scholarship money of $40,000 per year beginning now (time 0)and continue indefinitely. If the funds earn 10% per year, the amount she must donate now is closest to:a. $340,000b. $400,000c. $440,000d. $493,800
The cost of maintaining a public monument in Washington, D.C. occurs as periodic outlays of $10,000 every 5 years. If the first outlay is 5 years from now, the capitalized cost of the maintenance at an interest rate of 10% per year is closest to:a. $1638b. $16,380c. $26,380d. $29,360
The capitalized cost of machine P is closest to:a. $35,405b. $97,840c. $354,050d. $708,095
In comparing the machines on a present worth basis, the present worth of machine Q is closest to:a. $68,445b. $97,840c. $125,015d. $223,120
In comparing the machines on a present worth basis, the present worth of machine P is closest to:a. $82,130b. $87,840c. $91,568d. $112,230
In the PW method of alternative evaluation, equal service means that:a. all projects must start at the same time.b. all projects are evaluated over the same time period.c. all projects must have the same operating cost.d. all projects have equal salvage values.
Dwayne has four independent vendor proposals to contract the nationwide oil recycling services for the Ford Corporation manufacturing plants. All combinations are acceptable, except that vendors B and C cannot both be chosen. Revenue sharing of recycled oil sales with Ford is a part of the
Feng Seawater Desalination Systems has established a capital investment limit of $800,000 for next year for projects that target improved recovery of highly brackish groundwater. Select any or all of the projects using a MARR of 10% per year.All projects have a 4-year life.Initial Net Cash Salvage
Determine which of the following independent projects should be selected for investment if$240,000 is available and the MARR is 10% per year. Use the PW method to evaluate mutually exclusive bundles to make the selection.Initial Net Cash Project Investment, $ Flow, $/year Life, Years A 100,000
A small manufacturing company is considering the addition of one or more of four new product lines. If the total amount of investment capital available for new ventures is $800,000, which one(s) should the company undertake on the basis of a present worth analysis? Assume the company uses a 5-year
Three alternatives to incorporate improved techniques to manufacture computer drives to play HD DVD optical disc formats have been developed and costed. Compare the alternatives below using capitalized cost and an interest rate of 12% per year compounded quarterly.Alternative Alternative
million gallons per day to meet increasing demand. One alternative is to spend $10 million to increase the size of an existing reservoir in an environmentally acceptable way. Added annual upkeep will be $25,000 for this option. A second option is to drill new wells and provide added pipelines for
A water supply cooperative plans to increase its water supply by
UPS Freight plans to spend $100 million on new long-haul tractor-trailers. Some of these vehicles will include a new shelving design with adjustable shelves to transport irregularly sized freight that requires special handling during loading and unloading. Though the life is relatively short, the
The president of Biomed Products is considering a year compounded quarterly.long-term contract to outsource maintenance and operations that will significantly improve the energy efficiency of their imaging systems. The payment schedule has two large payments in the first years with continuing
Compare the cost of the two types of composite materials on the basis of their capitalized costs.Use an interest rate of 10% per year.Material J1 Material K2 First cost, $ 55,000 325,000 Maintenance cost, $/year 6,000 1,000 Salvage value 2,000 200,000 Life, years 3 q
Field chlorination of reclaimed water can be accomplished via a low-cost system that uses calcium hypochlorite tables. System components include a 4 foot diameter pipe that is 4 inches long($70), a solenoid valve ($50), a float switch ($30), a chlorine analyzer ($1500), and a programmable VFD
An alumna of Ohio State University wants to set up an endowment fund that can award scholarships to female engineering students totalling$100,000 per year forever. The first scholarships are to be granted now and continue each year from now on. How much must the alumna donate now, if the endowment
What is the capitalized cost (absolute value) of the difference between the following two plans at an interest rate of 10% per year? Plan A requires an expenditure of $50,000 every five years forever beginning in year 5. Plan B requires an expenditure of $100,000 every 10 years forever beginning in
John wants to have the financial ability to withdraw$80,000 per year forever beginning 30 years from now. If his retirement account earns 8% per year interest and dividends, what is the required balance in (a) year 29, and (b) year 0?
The cost of extending Park Road PR2 in Yellowstone National Park is $1.7 million. Resurfacing and other maintenance is expected to cost$350,000 every 3 years. What is the capitalized cost of the road extension at an interest rate of 6%per year?
Determine the capitalized cost of $1,000,000 at time 0, $125,000 in years 1 through 10, and$200,000 per year from year 11 on. Use an interest rate of 10% per year.
Determine the capitalized cost of $100,000 now and $50,000 per year in years one through infinity at an interest rate of 10% per year compounded continuously.
The Golden Gate bridge is maintained by 17 ironworkers, who replace corroding steel and rivets, and 38 painters. If the painters have an average wage of $120,000 per year with benefits and the ironworkers get $150,000, what is the capitalized cost today of all the future wages for bridge
Recently introduced Gatorade Endurance Formula contains more electrolytes (such as calcium and magnesium) than the original sports drink formula, thus causing Endurance to taste saltier to some. It is important than the amount of electrolytes be precisely balanced in the manufacturing process. The
A medium-size municipality plans to develop a software system to assist in project selection during the next 10 years. A life-cycle cost approach has been used to categorize costs into development, programming, operating, and support costs for each alternative. There are three alternatives under
The U.S. Army received two proposals for a turnkey design/build project for barracks for infantry unit soldiers in training. Proposal A involves an off-the-shelf “bare-bones” design and standard grade construction of walls, windows, doors, and other features. With this option, heating and
Three different plans were presented to the GAO by a high-tech facilities manager for operating an identity-theft scanning facility. Plan A involves renewable 1-year contracts with payments of $1 million at the beginning of each year. Plan B is a 2-year contract that requires four payments
Three types of bits can be used in an automated drilling operation. A bright high-speed steel (HSS)bit is the least expensive to buy, but it has a shorter life than either gold oxide or titanium nitride bits.The HSS bits will cost $3500 to buy and will last for 3 months under the conditions of use.
HJ Heinz Corporation is constructing a distribution facility in Italy for products such as Heinz Ketchup, Jack Daniel’s sauces, HP steak sauce, and Lea & Perrins Worcestershire sauce. A 15-year life is expected for the structure. The exterior of the building has not yet been selected. One
Akash Uni-Safe in Chennai, India, makes Terminator fire extinguishers. It needs replacement equipment to form the neck at the top of each extinguisher during production. Select between two metal-constricting systems. Use the corporate MARR of 15% per year with (a) present worth analysis, and (b)
The manager of engineering at the 900-megawatt Hamilton Nuclear Power Plant has three options to supply personal safety equipment to employees.Two are vendors who sell the items, and the third alternative is to rent the equipment for $50,000 per year, but for no more than 3 years per contract.These
Allen Auto Group owns corner property that can be a parking lot for customers or sold for retail sales space. The parking lot option can use concrete or asphalt. Concrete will cost $375,000 initially, last for 20 years, and have an estimated annual maintenance cost of $200 starting at the end of
An environmental engineer must recommend one of two methods for monitoring high colony counts of E. coli and other bacteria in watershed area “hot spots.” Estimates are tabulated and the MARR is 10% per year. Use tabulated factors or a spreadsheet for your analysis.a. Use present worth analysis
A metallurgical engineer is considering the two ceramics estimated below for use in a hightemperature annealing furnace. (a) Which should be selected on the basis of a present worth comparison at an interest rate of 12% per year? (b) If the life of material XX is increased from 3 to 4 years,
Virgin Galactic is considering two materials for certain parts in a re-useable space vehicle: carbon fiber reinforced plastic (CFRP) and fiber reinforced ceramic (FRC). The costs are shown below.Which should be selected on the basis of a present worth comparison at an interest rate of 10% per year?
An industrial engineer is considering two robots for improving efficiency in a fiber-optic manufacturing company. Robot X will have a first cost of$85,000, an annual maintenance and operation (M&O) cost of $30,000, and a $35,000 salvage value after its useful life of two years. A more sophisticated
Two mutually exclusive projects have the estimated cash flows shown. Use a present worth analysis to determine which should be selected at an interest rate of 10% per year.Project P Project Q First cost, $ 55,000 95,000 Annual cost, 9,000 5,000 year 1, $/year increasing by $1000 per year
A mechanical engineer is considering two types of pressure sensors for the low-pressure steam lines in several of the company plants. Piezoresistive sensors use the change in conductivity of semiconductors to measure the pressure. Fiber optic sensors use the properties of fiber optic
Benjamin is an engineer with the Lego Group in Bellund, Denmark, manufacturers of Lego toy construction blocks. He is responsible for the economic analysis of a new production method of special-purpose Lego parts. Method 1 will have an initial cost of $400,000, an annual operating cost of $140,000,
Heidleman Industries is considering two types of materials for roofing its warehouses. EPDM is an elastomeric polymer synthesized from ethylene, propylene, and a small amount of diene monomer, compounded with carbon black processing oils and various cross-linking and stabilizing agents.The 75 mil
Atari needs $4.5 million in new investment capital to develop and market downloadable game software for its new GPS2-ZX system. The plan is to sell $10,000 face-value corporate bonds at a discount of $9000 now. A bond pays a dividend each 6 months based on a bond interest rate of 5%per year with
An investor pays $30,000 for a convertible bond(one that can be converted into shares of corporate common stock). The bond conversion rate is 100 shares of stock anytime within the next five years. What will the stock price have to be in year 3 in order for the investor to make 10% per year on the
An investor thought that market interest rates were going to decline. He paid $19,000 for a corporate bond with a face value of $20,000. The bond has an interest rate of 10% per year payable annually.If the investor plans to sell the bond immediately after receiving the 4th interest payment, how
Jamal bought a 5% $1000 20-year bond for $925.He received a semiannual dividend for 8 years, then sold it immediately after the 16th dividend for $800. Did Jamal make the return of 5% per year compounded semiannually that he wanted?Solve using (a) factors, and (b) a spreadsheet.
The present worth of a $10,000 municipal bond due 6 years from now is $11,000. If the bond interest is payable quarterly and the interest rate used in discounting the cash flow is 8% per year compounded quarterly, what is the bond coupon rate b per year?
What is the present worth of a $40,000 bond that has a bond interest rate of 6% per year, payable semiannually? The bond matures in 20 years. The interest rate in the marketplace is 8% per year compounded semiannually.
Allison and Joshua are engineers at Raytheon.Each has presented a proposal to track fatigue development in composite materials installed on special-purpose aircraft. Which is the better plan economically, if i 12% per year compounded monthly?Allison’s Plan Joshua’s Plan Initial cost, $
The TechEdge Corporation offers two forms of 4-year service contracts on its closed-loop water purification system used in the manufacture of semiconductor packages for microwave and highspeed digital devices. The Professional Plan has an initial fee of $52,000 with annual fees starting at $1000 in
Chevron Corporation has a capital and exploratory budget for oil and gas production of $19.6 billion in one year. The Upstream Division has a project in Angola for which three offshore platform equipment alternatives are identified. Use the present worth method to select the best alternative at 12%
The Briggs and Stratton Commercial Division designs and manufactures small engines for golf turf maintenance equipment. A robotics-based testing system will ensure that their new signature guarantee program entitled “Always Insta-Start” does indeed work for every engine produced. Compare the
The Bureau of Indian Affairs provides various services to American Indians and Alaskan Natives. The Director of Indian Health Services is working with chief physicians at some of the 230 clinics nationwide to select the better of two medical X-ray system alternatives to be located at
A software package created by Navarro & Associates can be used for analyzing and designing three-sided guyed towers and three- and foursided self-supporting towers. A single-user license will cost $4000 per year. A site license has a onetime cost of $15,000. A structural engineering consulting
Halogen-free liquid crystal polymers are used for lead-free soldering without corrosion and maintenance issues. The polymers can be produced by either of two methods. Equipment for method A costs $70,000 initially and has a $15,000 salvage value after 3 years. The operating cost with this method
Burling Water Cooperative currently contracts the removal of small amounts of hydrogen sulfide from its well water using manganese dioxide filtration prior to the addition of chlorine and fluoride. Contract renewal for 5 years will cost$75,000 annually for the next 2 years and$100,000 in years 3,
The CFO of Marta Aaraña Cement Industries knows that many of the diesel-fueled systems in its quarries must be replaced at an estimated cost of $20 million 10 years from now. A fund for these replacements has been established with the commitment of $1 million at the end of next year(year 1) with
An undergraduate engineering student and her husband operate a pet-sitting service to help make ends meet. They want to add a daily service of a photo placed online for pet owners who are traveling.The estimates are: equipment and setup cost$950; net monthly income over costs $70. Over a period of
Biomet Implants is planning new online patient diagnostics for surgeons while they operate. The new system will cost $300,000 to install in an operating room, $5000 annually for maintenance, and have an expected life of 4 years. The revenue per system is estimated to be $80,000 in year 1 and to
A pilot plant for conducting research related to reverse osmosis concentrate recovery via lime softening can be leased for the 4-month project duration for $6,900 per month. Electrical work at the site will cost $8500 now and the technician to install the electrical work will charge $2000
The costs associated with manufacturing a multifunction portable gas analyzer are estimated. At an interest rate of 8% per year and a present worth analysis, which method should be selected?Manual Robotic First cost, $ 425,000 850,000 M&O cost, year 1, $ 90,000 10,000 Increase in M&O, $/year
American Electric Power agreed to spend $4.6 billion to clean up 46 coal-fired power plants that are believed to be contributing to acid rain. The plan is to reduce nitrogen oxide emissions by 69% by 2016 and sulfur dioxide emissions by 79% by 2018. Assume Plan A is to spend $0.575 billion per year
Oil from a particular type of marine microalgae can be converted to biodiesel that can serve as an alternate transportable fuel for automobiles and trucks. If lined ponds are used to grow the algae, the construction cost will be $13 million and the maintenance & operating (M&O) cost will be$2.1
An irrigation return flow drain has sampling equipment that can be powered by solar cells or by running an electric line to the site and using conventional power. Solar cells will cost $14,000 to install with a useful life of 10 years. Annual costs for inspection, cleaning, etc. are expected to
What is meant by the term equal service?
List all possible bundles for the four independent projects 1, 2, 3, and 4. Projects 3 and 4 cannot both be included in the same bundle.Evaluation of Equal-Life Alternatives
The lead engineer at Bell Aerospace has $1 million in research funds to commit this year. She is considering five separate R&D projects, identified as A through E. Upon examination, she determines that three of these projects (A, B, and C) accomplish exactly the same objective using different
A biomedical engineer with Johnston Implants just received estimates for replacement equipment to deliver online selected diagnostic results to doctors performing surgery who need immediate information on the patient’s condition. The cost is $200,000, the annual maintenance contract costs $5000,
When evaluating projects by the present worth method, how do you know which one(s) to select, if the (a) projects are independent, and (b) alternatives are mutually exclusive?
State two conditions under which the do-nothing alternative is not an option.
A plant manager wants to know the present worth of the maintenance costs for a reconditioned assembly line. An industrial engineer, who designed the system, estimates that the maintenance costs are expected to be zero for the first three years, $2000 in year four, $2500 in year five, and amounts
An engineer analyzing cost data about hydrogen sulfide monitors discovered that the information for the first three years was missing. However, he knew the cost in year 4 was $1250 and that it increased by 5% each year thereafter. If the same trend applied to the first three years, the cost in year
Border Steel invested $800,000 in a new shearing unit. At an interest rate of 12% per year compounded quarterly, the quarterly income required to recover the investment in 3 years is closest to:a. $69,610b. $75,880c. $80,370d. $83,550
Exotic Faucets and Sinks, Ltd. guarantees that their new infra-red sensor faucet will save any household that has two or more children at least$30 per month in water costs beginning one month after the faucet is installed. If the faucet is under full warranty for five years, the minimum amount a
The only time you change the original cash flow diagram in problems involving uniform series cash flows is when the:a. payment period is longer than the compounding periodb. payment period is equal to the compounding periodc. payment period is shorter than the compounding periodd. it may be done in
An interest rate of 2% per month is the same as:a. 24% per yearb. A nominal 24% per year compounded monthlyc. An effective 24% per year compounded monthlyd. Both (a) and (b)
If deposits are made monthly into a savings account and you want to know how much will be in the account after 5 years, the interest rate and n values you have to use area. The effective rate per month and n 60 monthsb. The effective rate per quarter and n 20 quartersc. The effective rate per
An interest rate obtained by dividing the nominal rate per year by the number of compounding periods in that year isa. A nominal interest rateb. An effective interest ratec. An effective interest rate only if the compounding period is monthlyd. Either (b) or (c)
Assume you make a single deposit of $1000 into a savings account that pays interest at 0.5% per month. If you want to know how much the account will be worth in 5 years, the only values you can use for i and n area. Effective i per month and n 60b. Effective i per quarter and n 30c. Effective i
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