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business
engineering economy
Engineering Economic Analysis 11th Edition Donald Newnan, Ted Eschenbach, Jerome Lavelle - Solutions
All of the following are intangible factors except:a. Taxesb. Goodwillc. Moraled. Convenience
At a compound interest rate of 10% per year,$10,000 one year ago is equivalent to this amount now:a. $8,264b. $9,091c. $11,000d. $12,100
Watch the video mentioned in Example 1.14. Give an example of a situation that you have experienced at a restaurant, retailer, or some other business that sells to the public. In your view, what should the business have done to be more ethical in their dealings with the public?
Yesterday, Carol, an engineer with Hancock Enterprises, was at lunch with several work friends. Joe, a person Carol has known for a year or so from similar lunches, proudly mentioned that he got a free flight and tickets to a major league playoff game two weeks from now in a distant city. Joe
What is one primary use of a code of ethics for a specific discipline of professional practice?
Explain the relation between a common moral and a personal moral.
In a built-in spreadsheet function, if a certain parameter does not apply, under what circumstances can it be left blank and when must a comma be entered in its place?Ethics and Economics
State the purpose for each of the following built-in spreadsheet functions:a. FV(i%,n,A,P)b. IRR(first_cell:last_cell)c. PMT(i%,n,P,F)d. PV(i%,n,A,F)
What are the values of the engineering economy symbols P, F, A, i, and n in the following spreadsheet or TVM calculator functions? Use a “?” for the symbol that is to be determined.a. FV(8%,10,2000,10000)b. PMT(12%,30,16000)c. PV(9%,15,1000,700)d. n(8.5,5000,50000,20000)
Write the engineering economy symbol that corresponds to each of the following spreadsheet functions.a. FVb. PMTc. NPERd. IRRe. PV
Kennywood Amusement Park spends $75,000 each year in consulting services for ride inspection and maintenance recommendations. New actuator element technology enables engineers to simulate complex computer-controlled movements in any direction. Construct a cash flow diagram for determining how much
Construct a cash flow diagram for the following cash flows: $10,000 outflow at time zero, $3000 per year inflow in years 1 through 5 at an interest rate of 10% per year, and an unknown future amount in year 5.
Construct a cash flow diagram to find the present worth of a future outflow of $40,000 in year 5 at an interest rate of 15% per year.
Identify the following as cash inflows or outflows to Honda: income taxes, loan interest, salvage value, rebates to dealers, sales revenues, accounting services, and cost reductions by subcontractors.
Identify the following as cash inflows or outflows to Anderson and Dyess Design-Build Engineers:office supplies, GPS surveying equipment, auctioning of used earth-moving equipment, staff salaries, fees for services rendered, interest from bank deposits.
The difference between cash inflows and cash outflows is known as what?
In the phrase “end-of-period convention,” the word “period” refers to what?
What does the term “end-of-period convention”mean? What does it not mean?
Phillips Refining plans to expand capacity by purchasing equipment that will provide additional smelting capacity. The cost of the initial investment is expected to be $16 million. The company expects revenue to increase by $3.8 million per year after the expansion. If the company’s MARR is 18%
Atlantic Metals and Plastics uses austenitic nickelchromium alloys to manufacture resistance heating wire. The company is considering a new annealing-drawing process to reduce costs. The new process will cost $1.8 million dollars now.Identify the symbols that are involved and the values of those
Sensotech, Inc., a maker of microelectromechanical systems, believes it can reduce product recalls by 10% if it purchases new software for detecting faulty parts. The cost of the new software is$225,000. Identify the symbols involved and the values for the symbols that are given in determining how
Corning Ceramics expects to spend $400,000 to upgrade equipment two years from now. If the company wants to know the equivalent value now of the planned expenditure, identify the symbols and their values, assuming Corning’s minimum attractive rate of return is 20% per year.
Vision Technologies, Inc. is a small company that uses ultra-wideband technology to develop devices that can detect objects (including people) inside of buildings, behind walls, or below ground.The company expects to spend $100,000 per year for labor and $125,000 per year for supplies before a
Identify the symbols involved if a pharmaceutical company wants to have a liability fund worth$200 million five years from now. Assume the company will invest an equal amount of money each year beginning one year from now and that the investments will earn 12% per year.
Define the symbols involved when a construction company wants to know how much money it can spend 3 years from now to purchase a new truck in lieu of spending $50,000 now. The compound interest rate is 15% per year.
At 9% per year simple interest, $1000 is equivalent to $1270 in three years. Define the symbols for the compound interest rate per year that would make this equivalence correct, i.e., $1000 now and$1270 in 3 years.
Define the economy symbols to determine how many years it would take for $13,000 to double in size at a compound interest rate of 6.8% per year.
All engineering economy problems will involve which two of the following symbols: P, F, A, i, n?
Companies frequently borrow money under an arrangement that requires them to make periodic payments of “interest only” and then pay the principal all at once. If Cisco International borrowed$500,000 (identified as loan A) at 10% per year simple interest and another $500,000 (identified as loan
If Aquatronics Inc. wants its investments to double in value in 4 years, what rate of return would it have to make on the basis of (a) simple interest, and (b) compound interest?
How many years would it take for money to triple in value at 20% per year simple interest?
A company that manufactures general-purpose transducers invested $2 million four years ago in high-yield junk bonds. If the bonds are now worth$2.8 million, what rate of return per year did the company make on the basis of (a) simple interest, and (b) compound interest?
A design-build-operate engineering company borrowed $6 million for 3 years so that it can purchase new equipment. The interest is compounded and the total amount owed will be paid in a single lump sum amount at the end of the 3-year period.The interest at the end of the first year will
How much can you borrow today if you promise to repay $20,000 two years from today at a compound interest rate of 20% per year?
An engineer who was in the business of customizing software for small construction companies repaid a loan that she got 3 years ago at 7% per year simple interest. If the amount she repaid was$35,000, what was the principal amount of the loan?
Fill in the missing values A through D in the table for a loan of $10,000, if the interest rate is compounded at 10% per year.
At 10% per year simple interest, how long will it take for a deposit of $1000 now to accumulate to$100,000?
Valtro Electronic Systems, Inc. set aside a lump sum investment four years ago in order to finance a plant expansion now. The money returned 10%per year simple interest. How much did the company set aside if the investment is now worth$850,000?
Valley Rendering, Inc. is considering the purchase of a new flotation system for recovering more grease. The company can finance a $150,000 system at 5% per year compound interest or 5.5% per year simple interest.a. If the total amount owed is due in a single payment at the end of 3 years, which
An engineer told you that a project is economically acceptable when it’s rate of return equals or exceeds the corporation’s cost of capital. Is this correct? Explain your answer.Simple and Compound Interest
The MARR used for a project’s acceptance or rejection is set relative to what cost?
How many years does it take for an investment of$280,000 to accumulate to at least $425,000 at 15% per year interest?
A start-up company with multiple nanotechnology products established a goal of making a rate of return of at least 25% per year on its investments for the first five years. If the company acquired $400 million in venture capital, how much did it have to earn in the first year?
Last year, Lee Industries decided to restructure some of its debt by paying off one of its short-term loans. To do so, the company borrowed the money one year ago at an interest rate of 10% per year. If the total cost of repaying the loan was $53 million, what was the amount of the original loan?
A sum of $2 million now is equivalent to $2.36 million one year from now at what interest rate?
A design-build engineering firm completed a pipeline project wherein the company realized a profit of $2.3 million in one year. If the amount of money the company invested was $6 million, what was the rate of return on the investment?
A broadband service company borrowed $2 million for new equipment and repaid the principal of the loan plus $275,000 interest after 1 year. What was the interest rate on the loan?
If Ford Motor Company’s profits increased from 22 cents per share to 29 cents per share in the April-June quarter compared to the previous quarter, what was the rate of increase in profits for that quarter?
Trucking giant Yellow Corp agreed to purchase rival Roadway for $966 million in order to reduce so-called back-office costs, that is, payroll and insurance, by $45 million per year. If the savings are realized as planned, what is the rate of return on the investment?
Bennett Industries invested $10,000,000 in a coventure one year ago. One year later, Bennett realized a profit of $1,450,000. What annual rate of return does this represent?
At an interest rate of 8% per year, $50,000 one year hence is equivalent to how much now?
A medium-size consulting engineering firm is trying to decide whether it should remodel its office now or wait and do it one year from now. If the firm does it now, the cost will be $38,000. The interest rate is 10% per year.a. What would the cost have to be one year from now to render the decision
In order to build a new warehouse facility, the regional distributor for Valco Multi-position Valves borrowed $1.6 million at 10% per year interest. If the company repaid the loan in a lump sum amount after two years, what was (a) the amount of the payment, and (b) the amount of interest?
When the yield on a U.S. Government Bond is 3%per year, investors expect the inflation rate to be approximately what?
What is meant by the term minimum attractive rate of return (MARR)?
The original amount of money in a loan transaction is known as what?
When an interest rate statement does not include a time period, e.g., 3%, the time period is assumed to be what?
The term that describes compensation for “renting”money is what?
Of the fundamental dimensions length, mass, time, and electric charge, which one is the most important in economic analysis? Why?Interest Rate and Equivalence
Interest is a manifestation of what general concept in engineering economy?
Give three examples of intangible factors.
What is meant by the term intangible factor?
What evaluation criterion is used in economic analysis?
What is meant by the term evaluation criterion?
What is meant by the do-nothing alternative?
The analysis techniques that are used in engineering economic analysis are only as good as what?
In economic analysis, revenues and costs are examples of what?
Which of the following would be considered noneconomic factors in deciding which type of power plant to build: (a) equipment cost; (b) morale;(c) goodwill; (d) salvage value; (e) public acceptance;and (f) aesthetics?
Discuss the importance of alternative identification in the engineering economic process.
2-55 Identify your major cash flows for the current school term as first costs, O&M expenses, salvage values. revenues, overhauls, and so on. Using a week as the time period, draw the cash flow diagram.
2-54 Pine Village needs some additional recreation fields. Construction will cost $225,000, and annual O&M expenses are $85,000. The city council estimates that the value of added youth leagues is about $190,000 annually. In year 6 another $75,000 will be needed to refurbish the fields. The salvage
2-53 Bonka Toys is considering a robot that will cost $20,000 to buy. After 7 years its salvage value will
2-52 On December 1, Al Smith purchased a car for $18,500. He paid $5000 immediately and agreed to pay three additional payments of $6000 each (which includes principal and interest) at the end of 1, 2, and 3 years. Maintenance for the car is projected at $1000 at the end of the first year and $2000
2-51 Large projects, such as a new tunnel under the Hud- son, the Big Dig in Boston, the Denver airport, a new military jet, and a natural gas pipeline from Alaska to the Midwest, often take 5 to 15 years from concept to completion. (a) Should benefit and cost estimates be adjusted for the greater
2-50 Develop a statement that expresses the extent to which cost-estimating topics also apply to estimating benefits. Provide examples to illustrate.
2-49 Randy Duckout has been asked to develop an est mate of the per-unit selling price (the price that each unit will be sold for) of a new line of handcrafted booklets that offer excuses for missed appoin ments. His assistant Doc Duckout has collected information that Randy will need in developing
2-48 Sally Statistics is implementing a system of statis cal process control (SPC) charts in her factory in as effort to reduce the overall cost of scrapped product The current cost of scrap is $X per month. If an 80% learning curve is expected in the use of the SPC chan to reduce the cost of
2-47 Rose is a project manager at the civil enginee ing consulting firm of Sands, Gravel, Concrete, and Waters, Inc. She has been collecting data on a projec in which concrete pillars were being constricted however not all the data are available. She has bees able to find out that the 10th pillar
2-46 If 200 labor hours were required to produce the 1st unit in a production run and 60 labor hours
2-45 Determine the time required to produce the 2000th item if the first item requires 180 minutes to produce and the learning-curve percentage is 92%. (Answer: 72.1 minutes)
2-44 Padre works for a trade magazine that publishes lists of power-sizing exponents (PSE) that reflect economies of scale for developing engineering esti- mates of various types of equipment. Padre has been unable to find any published data on the VMIC machine and wants to list its PSE value in
2-43 Five years ago, when the relevant cost index was 120. a nuclear centrifuge cost $40,000. The centrifuge had a capacity of separating 1500 gallons of ionized solution per hour. Today, it is desired to build a cen- trifuge with capacity of 4500 gallons per hour, but the cost index now is 300.
2-42 Refer to Problem 2-41 and now assume the prices for the equipment that Constance wants to replace have not been constant. Use the cost index data for each piece of equipment to update the costs to the price that would be paid today. Develop the overall cost for Constance, again assuming the
2-41 A refinisher of antiques named Constance has been so successful with her small business that she is plan- ning to expand her shop. She is going to start enlarg- ing her shop by purchasing the following equipment.
2-40 A new aerated sewage lagoon is required in a small town. Earlier this year one was built on a similar site in an adjacent city for $2.3 million.
2-39 Your boss is the director of reporting for the Athens County Construction Agency (ACCA). It has been his job to track the cost of construction in Athens County. Twenty-five years ago he created the ACCA Cost Index to track these costs. Costs during the first year of the index were $12 per
2-38 Fifty years ago, Grandma Bell purchased a set of gold-plated dinnerware for $55, and last year you inherited it. Unfortunately a fire at your home destroyed the set. Your insurance company is at a loss to define the replacement cost and has asked your help. You do some research and find that
2-37 Estimate the cost of expanding a planned new clinic by 20,000 ft. The appropriate capacity exponent is 0.66, and the budget estimate for 200,000 ft was $15 million. (Answer: $1 million)
2-36 Sung Sam, Inc. is designing a new digital camcorder that is projected to have the following per-unit costs to manufacture:
2-35 You want a mountain cabin built for weekend trips. vacations, to host family, and perhaps eventually retire in. After discussing the project with a local contractor, you receive an estimate that the total construction cost of your 2000-ft lodge will be $250,000. The percentage of costs is
2-34 You and your spouse are planning a second honey. moon to the Cayman Islands this summer and would like to have your house painted while you are away. Estimate the total cost of the paint job from the information given below, where:
2-33 Northern Tundra Telephone (NTT) has received a contract to install emergency phones along a new 100-mile section of the Snow-Moose Turnpike. Fifty emergency phone systems will be installed about 2 miles apart. The material cost of a unit is $125 NTT will need to run underground communication
2-32 Develop an estimate for each of the following situations. (a) The cost of a 500-mile automobile trip, if gaso- line is $3 per gallon, vehicle wear and tear is $0.50 per mile, and our vehicle gets 20 miles per gallon. (b) The total number of hours in the average human life, if the average life
2-31 In the text we describe three effects that compli- cate the process of making estimates to be used in engineering economy analyses. List these three effects and comment on which might be the most influential. 2-32 Develop an estimate for each of the following situations.
2-30 In looking at Figures 2-4 and 2-5, restate in your own words what the authors are trying to get across with these graphs. Do you agree that this is an important effect for companies? Explain.
2-29 Estimating benefits is often more difficult than cost estimation. Use the example of car ownership to describe the complicating factors in estimating the costs and benefits.
2-28 Most engineering students own a computer. What costs have you incurred at each stage of your com- puter's life cycle? Estimate the total cost of owner- ship. Estimate the benefits of ownership. Has it been worth it?
2-26 Define the difference between a "cash cost" and a "book cost." Is engineering economic analysis con- cerned with both types of cost? Give an example of each, and provide the context in which it is important. 2-27 In your own words, develop a statement of what the authors mean by "life-cycle
2-24 Consider the situation of owning rental properties that local university students rent from you for the academic year. Develop a set of costs that you could classify as recurring and others that could be classi- fied as nonrecurring. 2-25 List and classify your costs in this academic year as
2-23 You are reevaluating the pump choice that was made last year by your boss. The expected cost savings have not occurred because the pump is too small. Choice A. at $90,000, is to replace the pump with one that is the right size and sell the old one. Choice B, at $100,000. is to buy a small pump
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