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engineering economy
Basics Of Engineering Economy 2nd Edition Leland T. Blank, Anthony Tarquin - Solutions
The Autocar E3 refuse truck has an energy recovery system developed by Parker Hannifin LLC that is expected to reduce fuel consumption by 50%. Pressurized fluid flows from carbon fiber–reinforced accumulator tanks to two hydrostatic motors that propel the vehicle forward. The truck recharges the
Coal-fired power plants emit CO2, which is one of the gases that is of concern with regard to global warming. A technique that power plants can adopt to keep most of the CO2 from entering the air is called CO2 capture and storage (CCS). If the incremental cost of the sequestration process is$0.019
Income from recycling the paper and cardboard generated in an office building has averaged $3000 per month for 3 years. What is the future worth of the income at an interest rate of 8% per year compounded quarterly?
Western Refining purchased a model MTVS peristaltic pump for injecting antiscalant at its nanofiltration water conditioning plant. The cost of the pump was $1200. If the chemical cost is $11 per day, determine the equivalent cost per month at an interest rate of 1% per month. Assume 30 days per
You plan to invest $1000 per month in a stock that pays a dividend at a rate of 4% per year compounded quarterly. How much will the stock be worth at the end of 9 years if there is no interperiod compounding?
There is no interperiod compounding for the transactions shown. Your manager asks you to determine the amount of money in the account at the end of year 3 at an interest rate of 8% per year compounded semiannually. Draw the cash flow diagram and solve using (a) tabulated factors, and(b) a
If you deposit $1500 per month into a credit union savings account that pays interest at a rate of 6%per year compounded quarterly, how much will be in the account at the end of five years? There is no interperiod compounding.
In an effort to save money for early retirement, an environmental engineer plans to deposit $1200 per month starting one month from now, into a selfdirected investment account that pays 8% per year compounded semiannually. How much will be in the account at the end of 25 years?
The initial cost of a pulverized coal cyclone furnace is $800,000. If the operating cost is $90,000 in year 1, $92,700 in year 2, and amounts increasing by 3% each year through a 10-year amortization period, what is the equivalent annual cost of the furnace at an interest rate of 1% per
Corrosion problems and manufacturing defects rendered a gasoline pipeline between El Paso and Phoenix subject to longitudinal weld seam failures.Therefore, pressure was reduced to 80% of the design value. If the reduced pressure results in delivery of less product valued at $100,000 per month, what
Find the present worth of an investment that starts at $8000 in year 1 and increases by 10% each year through year 7, if the interest rate is 10% per year compounded continuously.
Frontier Airlines hedged the cost of jet fuel by purchasing options that allowed the airline to purchase fuel at a fixed price for 2 years. If the savings in fuel costs were $140,000 in month 1,$141,400 in month 2, and amounts increasing by 1% per month through the 2-year option period, what was
Atlas Moving and Storage wants to have enough money to purchase a new tractor-trailer in 4 years at a cost of $290,000. If the company sets aside$4000 in month 1 and plans to increase its set aside by a uniform amount each month, how much must the increase be provided the funds earn 6%per year
Receipts from sales of hardened steel connectors was $50,000 in the first quarter, $51,000 in the second, and amounts increasing by $1000 per quarter through year 4. What is the equivalent uniform amount per quarter if the interest rate is 3% per quarter?
For the cash flows shown, determine the future worth in year 5 at an interest rate of 1% per month.Year 1 2 3 4 5 Cash Flow, $ 300,000 275,000 250,000 225,000 200,000
A company that manufactures brushless dc motors recently added a new product line of thin beam load cells. Start-up costs over the first 6 months were constant at $48,000 per month. Due to increased manufacturing efficiency, starting in month 7, costs were $46,000 and continued to decrease by $2000
Rotary encoder collars with targets on the face or outside diameter add speed sensing capability to rotating shafts. SKF Manufacturing expects sales of $150,000 in quarter one, increasing by $5,000 per quarter through year 5. Calculate the present worth of the sales through a 5-year period at an
The cost of capturing and storing all CO2 produced by coal-fired electricity generating plants during the next 200 years has been estimated to be $1.8 trillion. At an interest rate of 10% per year compounded monthly, what is the equivalent annual worth of such an undertaking over the 200 years?
A Hilti PP11 pipe laser can be mounted inside or on top of a pipe, a tripod, or in a manhole to provide fast and accurate positioning and alignment of pipe sections. Jordon Construction is building a 23-mile pipeline through the desert to dispose of reverse osmosis concentrate by injection into a
Anderson-McKee Construction expects to spend$835,000 for heavy equipment replacement 2 years from now and another $1.1 million 4 years from now. How much must the company deposit into a sinking fund each month to provide for the purchases, if the fund earns at a rate of return of 12% per year
Redflex Traffic Systems manages red light camera systems that take photographs of vehicles that run red lights. Red light violations in Hereford County result in fines of $75 per incident. A two-month trial period revealed that the sheriff department could expect to issue 300 citations per month
An environmental soil cleaning company received a contract to remove BTEX contamination from an oil company tank farm site. The contract required the soil cleaning company to provide quarterly invoices for materials and services provided. If the material costs were $140,000 per quarter and the
Linear actuators coupled to servo motors are expected to save a pneumatic valve manufacturer$19,000 per quarter through improved materials handling. If the savings begin now, what is the future worth of the savings through the end of year 3? The company uses an interest rate of 12% per year
Plastics Engineering, Inc., a developer of advanced bolt drive components, recently began manufacturing sprockets made of polyacetal plastics that are approved for direct food contact. The company claims that high-precision manufacturing promotes longer belt life, thereby eliminating costs
Erbitux is a colorectal cancer treatment drug that is manufactured by ImClone Systems, Inc. If the treatment takes place over a 1 year period at a cost of $10,000 per month and the patient lives 5 years longer than he/she would have lived without the treatment, how much would that person have to
According to a study by the National Association of Colleges and Employers, the average monthly salary for a recent electrical engineering graduate was $4944 versus $2795 for a graduate with a degree in liberal arts. What is the future worth in 40 years of the income difference at an interest rate
Spectrum Lab Products, a supplier of high quality lab equipment, borrowed $3 million to renovate one of its testing labs. The loan was repaid in 2 years through quarterly payments that increased by $50,000 each time. At an interest rate of 12%per year compounded quarterly, what was the size of the
Phoenix Pump and Filter projects that the cost of steel bodies for Model R910 valves will increase by $2.50 every 3 months. If the cost for the first quarter is expected to be $90 per unit, what is the present worth of a unit’s costs over a 3-year time period at an interest rate of 12% per year
El Paso Water Utilities purchases surface water from Elephant Butte Irrigation District at a cost of$120,000 per month in the months of February through September. Instead of paying monthly, the utility makes a single payment of $800,000 at the end of the calendar year (December) for the water it
Bethany Iron and Steel is evaluating possible economic advantages of being involved in electronic commerce. A modest e-commerce package is available for $30,000. If the company wants to recover the cost in 2 years, what is the equivalent amount of new income that must be realized every 6 months at
Lotus Development has a software rental plan called SmartSuite that is available on the world wide web. A number of programs are available at$2.99 for 48 hours. If a construction company uses the service an average of 48 hours per week, what is the present worth of the rental costs for 10 months at
The optical products division of Panasonic is planning a $3.5 million building expansion for manufacturing its powerful Lumix DMC digital zoom camera. If the company uses an interest rate of 20% per year compounded quarterly for all new investments, what is the uniform amount of revenue per quarter
Video cards based on a high speed data processor typically cost $250. A recently released light version of the chip costs $150. If Karamba Videos purchases 3000 chips per quarter, what is the present worth of the savings associated with the cheaper chip over a 2-year period at an interest rate of
The by-product department of Iowa Beef has the revenue stream shown. If the interest rate is an effective 12% per year compounded continuously, determine the annual worth of the revenues for years 1 through 5.Year Revenue, $0 40,000 1 40,000 2 40,000 3 50,000 4 50,000 5 50,000
(a) Using tabulated factors for the cash flow series shown, calculate the future worth at the end of quarter 6 using i8% per year compounded quarterly.(b) What are the calculator functions?Quarter 0 1 2 3 4 5 6 Cash flow, $ 100 100 300 300 300 300 300
McMillan Company manufactures electronic flow sensors that are designed as an alternative to balland-tube rotometers. The company recently spent$3 million to increase the capacity of an existing production line. If the extra revenue generated by the expansion amounts to $200,000 per month, how long
Hemisphere Electric Coop (HEC) is planning to outsource its 51-person information technology(IT) department to Dyonyx. HEC believes this move will allow it to have access to cutting edge technologies and skill sets that would be cost prohibitive to build on its own. If it is assumed that the loaded
Improvements at a Harley-Davidson Plant are estimated to be $7.8 million. Construction is expected to take three years. What is the future worth of the project in year 3 at an interest rate of 6% per year compounded quarterly, assuming the funds are allocated (a) completely at time 0, and (b)
Head & Shoulders shampoo insured spokesman Troy Polamalu’s (of the Pittsburgh Steelers) head of hair for $1 million with Lloyd’s of London. The insurance payout would be triggered if he lost at least 60% of his hair during an on-field event.Assume the insurance company placed the odds of a
In order to have enough money to finance his passion for top-level off-road racing, a mechanical engineer decided to sell some of his “toys.” At time t 0, he sold his chopper motorcycle for$18,000. Three months later, he sold his Baja prerunner SUV for $26,000. At the end of month six, he got
For the cash flows shown, determine the future worth in year 5 at an interest rate of 10% per year compounded continuously. Solve using (a) tabulated factors, and (b) a financial calculator.
Periodic outlays for inventory-control software at Baron Chemicals are estimated to be $120,000 next year, $180,000 in 2 years, and $250,000 in 3 years. What is the present worth of the costs at an interest rate of 10% per year compounded continuously?
Pollution control equipment for a pulverized coal cyclone furnace is expected to cost $190,000 two years from now and another $120,000 four years from now. If Monongahela Power wants to set aside enough money now to cover these costs, how much must be invested at an interest rate of 8% per year
A sum of $120,000 now at an interest rate of 10%per year compounded semiannually is equivalent to how much money 6 years ago? Solve using tabulated factors in two ways: using the effective annual rate and the effective semiannual rate.
Soil Mediators, Inc., plans to finance a site reclamation project that will require a 4-year cleanup period. If the company borrows $4.5 million now and wants to earn 16% per year compounded semiannually on its investment, how much will the company have to receive in a lump sum payment when the
What is the future worth 4 years from now of a present cost of $242,000 to Hydron, Inc., at an interest rate of 18% per year compounded monthly?
Hydrex Mechanical Products plans to set aside$160,000 now for possibly replacing its large synchronous refiner motors whenever it becomes necessary.The replacement is expected to take place in 3-12 years. Determine how much the company will have in its investment set-aside account if it achieves a
Crow Corporation, a company that specializes in precision metal fabrication, is conducting a study to determine if it should update equipment now or later. If the cost 2 years from now is estimated to be $260,000, how much can the company afford to spend now if its minimum attractive rate of return
Federal facilities associated with an international port of entry at Tornillo, TX, are expected to cost$54 million. A six-lane, 1274-foot-long bridge is expected to cost $14 million. Land and inspection facilities, offices, and parking will add another$10 million to the cost. Construction is
The TerraMax truck currently being manufactured and field tested by Oshkosh Truck Co. is a driverless truck intended for military use. Such a truck would free personnel for non-driving tasks such as reading maps, scanning for roadside bombs, or scouting for the enemy. If such trucks would result in
A corporation deposits $20 million in a money market account for 1 year. What will be the difference in the total amount accumulated at the end of the year at 18% per year compounded monthly versus 18% per year simple interest?
Assume a problem statement involves only single amounts, that is, no series or gradients, and the interest rate is stated as 12% per year compounded quarterly. For the following n values, determine the proper interest rate to use in the factor equations:(a) n 20 quarters; (b) n 10 semiannual
Armstrong Fisheries took out a $400,000 loan.Clyde Armstrong wants to know the semiannual payment for the next 10 years at the loan interest rate of 8% per year compounded quarterly.a. Construct the cash flow diagram and indicate the compounding period and payment period.What is the compounding
Identify the payment period and compounding period for the following situations:a. Deposits are made each quarter into an account reserved for purchasing new equipment two years from now. The interest rate on the deposits is 12% per year compounded monthly.b. The Williams family takes a $10,000
A bank advertises quarterly compounding for business checking accounts. What payment and compounding periods are associated with deposits of daily receipts?
Deposits of $100 per week are made into an investment account that pays interest of 6% per year compounded quarterly. Identify the payment period, compounding period, and compounding frequency.
When interest is compounded monthly and single cash flows are separated by 3 years, what must the time period be on the interest rate if the value of n in the PF or FP equation is (a) n 3; (b) n 6;or (c) n 12?
(a) An interest rate of 6.8% per semiannual period compounded weekly is equivalent to what weekly interest rate? (b) Is the weekly rate a nominal or effective rate? Assume 26 weeks per 6 months.
For an interest rate of 12% per year compounded continuously, find (a) the nominal rate per year,(b) the nominal rate per quarter; (c) the effective rate per quarter, and (d) the effective rate per month.
For an interest rate of 2% per month, find (a) the effective rate per quarter, and (b) the effective rate per year.
Convert an interest rate of 2% per quarter compounded monthly into a nominal interest rate over the following time periods: (a) quarter;(b) 2 months; (c) 2 years; (d) 1 year; (e) 6 months.
Convert an interest rate of 1.5% per month into a nominal interest rate over the following time periods: (a) quarter; (b) year; (c) semiannual;(d) decade.
Determine the number of times interest is compounded in 1 year for the following interest statements:(a) 3% per quarter; (b) 1% per month; and(c) 8% per year compounded semiannually.
Identify the compounding period for the following interest statements: (a) 3% per year; (b) 10% per year compounded quarterly; (c) nominal 7.2%per year compounded daily; (d) effective 3.4% per quarter compounded continuously; and (e) 0.012%per day compounded hourly.
Identify the compounding period associated with each of the following interest rate statements.a. 2% per quarterb. 3% per quarter compounded monthlyc. effective 1% per month compounded weeklyd. nominal 6.5% per year compounded semiannuallye. 1% per monthf. effective 7% per year compounded annually
Identify each of the following interest rate statements as either nominal or effective.a. 4% per yearb. 6% per year compounded annuallyc. 10% per quarterd. 8% per year compounded monthlye. 1% per monthf. 1% per month compounded monthly g. 0.1% per day compounded hourly h. effective 1.5% per month
For an interest rate of 2% per quarter, determine the nominal interest rate per (a) semiannual period; (b) year; and (c) 2 years.
At an interest rate of 8% per year, the present worth in year 0 of a lease that requires a payment of $9,000 now and amounts increasing by 8% per year through year 7 is closest to:a. $60,533b. $65,376c. $72,000d. $69,328
Maintenance costs for a regenerative thermal oxidizer have been increasing uniformly for 5 years. If the cost in year 1 was $8000 and it increased by $900 per year through year 5, the present worth of the costs at an interest rate of 10% per year is closest to:a. $31,670b. $33,520c. $34,140d.
You deposit $1000 now and you want the account to have a value as close to $8870 as possible in year 20. Assume the account earns interest at 10%per year. The year in which you must make another deposit of $1000 isa. 6b. 8c. 10d. 12
If you borrow $24,000 now at an interest rate of 8% per year and promise to repay the loan with payments of $3000 per year starting one year from now, the number of payments that you will have to make is closest to:a. 8b. 11c. 14d. 17
Chemical costs associated with a packed-bed flue gas incinerator (for odor control) have been decreasing uniformly for 5 years because of increases in efficiency. If the cost in year 1 was$100,000 and it decreased by $5,000 per year through year 5, the present worth of the costs at 10% per year is
Assume you borrow $10,000 today and promise to repay the loan in two payments, one in year 2 and the other in year 4, with the one in year 4 being only half as large as the one in year 2. At an interest rate of 10% per year, the size of the payment in year 4 will be closest to:a. $4280b. $3975c.
The maker of a motion-sensing towel dispenser is considering adding new products to enhance offerings in the area of touchless technology. If the company does not expand its product line now, it will definitely do so in 2 years. Assume the interest rate is 10% per year. The amount the company can
Income from sales of an injector-cleaning gasoline additive has been averaging $100,000 per year. At an interest rate of 18% per year, the future worth of the income in years 1–5 is closest to:a. $496,180b. $652,200c. $715,420d. $726,530
The equivalent amount of money that can be spent seven years from now in lieu of spending $50,000 now at an interest rate 18% per year is closest to:a. $15,700b. $159,300c. $199,300d. $259,100
A winner of the state lottery was given two choices: receive a single lump sum payment now of $50 million or receive 21 uniform payments, with the first payment to be made now, and the rest to be made at the end of each of the next 20 years.At an interest rate of 4% per year, the amount of the 21
An engineer planning for retirement decides that she wants to have income of $100,000 per year for 20 years with the first withdrawal beginning 30 years from now. If her retirement account earns interest at 8% per year, the annual amount she would have to deposit for 29 years beginning 1 year from
Yejen Industries Ltd. invested $10,000,000 in manufacturing equipment for producing small wastebaskets. If the company uses an interest rate of 15% per year, the amount of money it will have to earn each year to recover its investment in 7 years is closest to:a. $2,403,600b. $3,530,800c.
A manufacturer of triaxial accelerometers wants to have $2,800,000 available 10 years from now so that a new product line can be initiated. If the company plans to deposit money each year, starting one year from now, the equal amount to deposit each year at 6% per year interest in order to have the
The amount of money that would be accumulated in 10 years from an initial investment of $1000 at an interest rate of 8% per year is closest to:a. $2160b. $2290c. $2418d. $2643
A mechanical engineer conducting an economic analysis of wireless technology alternatives discovered that the FG factor values were not in his table. He decided to create the (FG,i,n) factor values himself. He did so by:a. Multiplying the (FA,i,n) and (AG,i,n) valuesb. Dividing (FA,i,n) values
Revenue from gas wells that have been in production for at least 5 years tends to follow a decreasing geometric gradient. One particular rights holder received royalties of $4000 per year for years 1 through 6, but beginning in year 7, income decreased by 15% per year through year 14. What was the
San Antonio is considering various options for providing water in their 50-year plan, including desalting. One brackish aquifer is expected to yield desalted water that will generate revenue of $4.1 million per year for the first 4 years, after which less production will decrease revenue by 10%
McCarthy Construction is trying to bring the company-funded portion of its employee retirement fund into compliance with HB-301. The company has already deposited $500,000 in each of the last 5 years. Beginning in year 6, McCarthy will increase its deposits by 15% per year through year 20. How much
Union Pacific is considering the elimination of a railroad grade crossing by constructing a dualtrack overpass. The railroad subcontracts for maintenance of its crossing gates at $11,500 per year. Beginning 4 years from now, however, the costs are expected to increase by 10% per year into the
Wrangler Western has some of its jeans stonewashed under a contract with independent U.S.Garment Corp. If U.S. Garment’s operating cost per machine is $22,000 per year for years 1 and 2 and then it increases by 8% per year through year 10, what is the present worth in year 0 of the machine
The annual worth for years 1 through 8 of the cash flows shown is $30,000. What is the amount of the cash flow labeled x in year 3, if i 10% per 0 1 2 3 4 year? Solve using (a) tabulated factors, and (b) a spreadsheet.
The future worth in year 8 for the cash flow series shown is $20,000. At an interest rate of 10% per year, what is the value of the cash flow labeled x in year 4?
A software company that installs systems for inventory control using RFID technology spent$600,000 per year for the past 3 years in developing their latest product. The company wants to recover its investment in 5 years beginning now. If the company signed a contract that will pay$250,000 now and
Lifetime Savings Accounts, known as LSAs, allow people to invest after-tax money without being taxed on any of the gains. An engineer began his LSA by investing $10,000 five years ago and increased his deposit by $1000 each year, including a deposit today. How much will be in the account
Nippon Steel’s expenses for heating and cooling one of its large manufacturing facilities are expected to increase according to an arithmetic gradient beginning in year 2. The costs are expected to be $550,000 now (year 0), $550,000 in year 1, and increases by $40,000 each year through year 12.
A build to operate (BTO) company signed a contract to operate several industrial wastewater treatments plants for 10 years. The contract will pay the company $2.5 million now and amounts increasing by $200,000 each year through year 10.At an interest rate of 10% per year, what is the present worth
An industrial engineering consulting firm signed a lease agreement for simulation software. Calculate the present worth in year 0 if the lease requires a payment of $30,000 now and amounts increasing by 5% per year through year 7. Use an interest rate of 10% per year.
A chemical engineer saving for his retirement deposited$10,000 into a stock fund at t 0. In year one and each year thereafter through year 20, he increased the deposit by $1500. If the rate of return on the investments is 12% per year, how much will his retirement account be worth at the end of
The cost of energy for operating high-lift pumps in a water distribution system was $1.4 million for the first three years. Beginning in year four, the cost increased by $30,000 each year for the next 12 years. What is the present worth in year 0 of these energy costs at an interest rate of 6% per
A rural utility company provides standby power to pumping stations using diesel-powered generators.An alternative has arisen whereby the utility could use a combination of wind and solar power to run its generators, but it will be a few years before the alternative energy systems are available.The
A supplier of certain suspension system parts for General Motors wants to have a contingency fund that it can draw on during down periods of the economy. The company wants to have$15 million in the fund 5 years from now. If the company deposits $1.5 million now, determine the uniform amount to add
Calculate (a) the annual worth for years 1–8 and(b) the future worth in year 8 of the following series of incomes and expenses. The interest rate is 10% per year.Year Income, $ Expense, $0 20,000,000 1–5 8,000,000 1,000,000 6–8 9,000,000 2,000,000
Cisco’s gross revenue (the percentage of total revenue left after subtracting the cost of goods sold)was 70.1% of total revenue over a 4-year period. If the total revenue per year was $5.8 billion for the first two years and $6.2 billion for the last 2, find the future worth of the gross revenue
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