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engineering economy
Basics Of Engineering Economy 3rd Edition Leland T. Blank, Anthony Tarquin - Solutions
3. 5.25 Cisco, Inc. has a proposal from the Engineering Planning Division to invest Cisco retained earnings in the design, testing, and development of the next generation of smart grids useful in the Internet of Things (IoT)environment. The initial investment projection is $5,000,000 in year
2. 5.24 Page 152Assume you won a worldwide lottery that pays $5 million in year 0, $5 million in year 1, and $200,000 in years 5 through 100.Assuming that 100 years is as “long” as infinity, calculate the perpetual equivalent annual worth for years 1 through infinity at an interest rate of 10%
1. 5.23 The State of Chiapas, Mexico, decided to fund a program for literacy. The first cost of $200,000 now and an update budget of$100,000 every 7 years forever is requested. Determine the perpetual equivalent annual cost at an interest rate of 10% per year.
11. 5.22 Blue Whale Moving and Storage recently purchased a warehouse building in Santiago. The manager has two good options for moving pallets of stored goods in and around the facility. Alternative 1 includes a 4000-pound capacity, electric forklift(P = $−30,00; n = 12 years; AOC = $−1000 per
10. 5.21 Some estimates have been presented to Charlene, the Director of Operations (DO) at Holly Farms, which is considering alternative environmental chambers for a project that will detail laboratory confirmations of online bacteria tests in chicken meat for the presence of E. coli 0157:H7 and
9. 5.20 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.Table Summary: A table
8. 5.19 Page 151Equipment 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 a net revenue of $35,000 the first year, increasing by $10,000 per year over the life of 5 years. (a) Use a spreadsheet
7. 5.18 A chemical engineer is considering two styles of pipes for moving distillate from a refinery to the tank farm. A small pipeline will cost less to purchase (including valves and other appurtenances) but will have a high head loss and, therefore, a higher pumping cost. The small pipeline will
6. 5.17 A remotely located air sampling station can be powered by solar cells or by running an aboveground electric line to the site and using conventional power. Solar cells will cost $16,600 to install and will have a useful life of 5 years with no salvage value. Annual costs for inspection,
5. 5.16 The City Council in a southwestern city is considering the construction of permanent restrooms in 22 of its smaller parks (i.e., parks less than 12 acres) or pay for portable toilets on a year-round basis. The cost of constructing the 22 permanent restrooms will be $3.8 million. The 22
4. 5.15 Your friend is considering a new exhaust system for his Lamborghini Diablo. The estimates from two shops are shown below.Besides installation, shop Y includes a full replacement warranty for 4 years in the quote. Since money does not appear to be a problem for your friend, and he asked you
3. 5.14 Accurate air flow measurement requires straight unobstructed pipe for a minimum of 10 diameters upstream and 5 diameters downstream of the measuring device. In one particular application, physical constraints compromised the pipe layout, so the engineer was considering installing the air
2. 5.13 A materials engineer is considering two compounds for the outer shells of optical fibers. The germanium tetrachloride process (G) has the following estimates: first cost of $85,000; annual M&O costs of $32,000;a useful life of 8 years; and a $20,000 salvage value. The phosphorus oxychloride
1. 5.12 A large textile company is trying to decide which sludge dewatering process it should use ahead of its sludge drying operation. The costs associated with centrifuge and belt press systems are shown. Compare them on the basis of their annual worths using an interest rate of 10% per year.Page
11. 5.11 A 600-ton press used to produce composite-material 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, use tabulated factors to calculate the (a)capital recovery, and (b) total
10. 5.10 A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows estimated. 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, and (b) a spreadsheet.Table
9. 5.9 U.S. Steel is considering a plant expansion to produce austenitic, precipitation hardened, duplex, and martensitic stainless-steel round bars 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 year starting 1
8. 5.8 White Oaks Properties builds strip shopping centers and small malls.The company plans to replace its refrigeration, cooking, HVAC, and other equipment with newer models in the entire center built 9 years ago.The original purchase price of the equipment was $638,000 nine years ago and the
7. 5.7 You just paid $2000 for a major repair on the suspension system of a car that you purchased 5 years ago. The cost of periodic maintenance has been $800 every 2 years. If you donate the car to charity after 8 years of ownership, what is the equivalent annual cost of maintenance and repairs
6. 5.6 Eight years ago, Ohio Valley Trucking purchased a large-capacity dump truck for $115,000 to provide short-haul earth-moving services.The company sold it today for $45,000. Operating and maintenance costs averaged $10,500 per year. A complete overhaul at the end of year 4 cost an extra $3600.
5. 5.5 You are about to start a side business while in college. To do so, you just spent $30,000 for a used, fully equipped taco truck. You plan to provide quality food at lunch to construction workers at sites where there is no visible food outlet that is fast, affordable, and offers tasty, zesty
4. 5.4 An asset with a first cost of $20,000 has an annual operating cost of$12,000 and a $4000 salvage value after its 4-year life. The project will be needed for 6 years. This means that the asset will have to be repurchased and kept for only 2 years.1. Determine the capital recovery amount over
3. 5.3 A theft-avoidance locking system has a first cost of $10,000, an AOC of $7000, and no salvage value after its 3-year life. Assume that you were told the service provided by this asset would be needed for only 5 years. This means that the asset will have to be repurchased and kept for only 2
2. 5.2 Assume that an alternative has a 3-year life and that you calculated its annual worth over its 3-year life cycle. If you were told to provide the annual worth of that alternative for a 4-year study period, would the annual worth value you calculated from the alternative’s 3-year life cycle
1. 5.1 What is the major advantage that the annual worth method has over the present worth method?
13. 4.66 You own a $50,000 corporate bond with a bond interest rate of 6%payable monthly that is due 10 years from now. If you want to sell it today and realize a rate of return of 12% per year compounded monthly, the amount you must receive is closest to:1.a. $32,575 2.b. $33,125 3.c. $35,250 4.d.
12. 4.65 As part of your inheritance, you received a bond that will pay interest of $700 every 6 months for 15 years. If the coupon rate is 7%per year, the face value of the bond is:1.a. $10,000 2.b. $20,000 3.c. $30,000 4.d. $40,000
11. 4.64 A $25,000 mortgage bond with an interest rate of 6% per year payable semiannually is due 12 years from now. The present worth of the bond at an interest rate of 10% per year payable semiannually is closest to:1.a. $18,100 2.b. $18,925 3.c. $19,330 4.d. $22,155
10. 4.63 A $20,000 collateral bond has a coupon rate of 7% per year payable quarterly. The bond matures 30 years from now. At a market interest rate of 7% per year compounded semiannually, the amount and frequency of the bond interest payments is:1.a. $1400 per year 2.b. $1400 per quarter 3.c. $350
9. 4.62 You learned of a serious error in estimation for project 3. Its PW is actually $2500, not $ − 7300. If only two projects may be selected with no more than $100,000 invested, the projects selected are now:1.a. 2 and 3 2.b. 3 and 4 3.c. 2 and 4 4.d. None of these
8. 4.61 If only two projects may be selected with no more than $100,000 invested, the projects selected are:1.a. 1 and 2 2.b. 3 and 4 3.c. 2 and 3 4.d. 2 and 4
7. 4.60 If the investment budget is $75,000, all of the following mutually exclusive bundles should be evaluated, except:1.a. DN 2.b. 2,4 3.c. 2,3 4.d. 1,2
6. 4.59 The capitalized cost of machine X is closest to:1.a. $ − 103, 910 2.b. $ − 114, 310 3.c. $ − 1, 039, 080 4.d. $ − 238, 580
5. 4.58 In comparing the machines on a present worth basis, the present worth of machine Y is closest to:1.a. $ − 65, 270 2.b. $ − 97, 840 3.c. $ − 103, 910 4.d. $ − 114, 310
4. 4.57 The present worth of machine X is closest to:1.a. $ − 65, 270 2.b. $ − 87, 840 3.c. $ − 103, 910 4.d. $ − 114, 310
3. Page 1364.56 At a return of 10% per year, the amount you must deposit in your retirement account each year for years 0 through 9 (i.e., 10 deposits) if you want to withdraw $50,000 per year forever beginning 30 years from now is closest to:1.a. $4239 2.b. $4660 3.c. $4974 4.d. $5471
2. 4.55 The present worth of $50,000 now, $10,000 per year in years 1 through 15, and $20,000 per year in years 16 through infinity at 10% per year is closest to:1.a. Less than $169,000 2.b. $169,580 3.c. $173,940 4.d. $195,730
1. 4.54 From the PW values shown for four mutually exclusive alternatives, the one(s) to select is:Table Summary: Table divided into 2 columns with the headings:Alternative and PW at 8 percent in dollars.Alternative PW at 8%, $A −25, 000 B −12, 000 C 10,000 D 15,000 1.a. Only A 2.b. Only D 3.c.
6. 4.53 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
5. 4.52 Based on PW values, determine which of the following independent projects should be selected for investment if $240,000 is available and the MARR is 10% per year. (NCF = net cash flow)Table Summary: Table divided into 4 columns with the headings marked from left to right as: Project;
4. 4.51 Analon Health, a midsized health care company in Toronto, is considering the addition of one or more of four new services in hospitals. The total amount of investment capital available for new ventures is $800,000. Analon uses a 5-year project recovery period and a MARR of 20% per year. All
3. 4.50 The product development group of a high-tech electronics company developed five proposals for new products. The company wants to expand its product offerings, so it will undertake all projects that are economically attractive at the company’s MARR of 20% per year. The cash flows (in $1000
2. 4.49 An engineer calculated the PW values for four alternatives to develop a remotely controlled vibrations control system for offshore platform application. The results in the table use a MARR of 14% per year. Determine which alternative(s) should be selected if (a) the alternatives are
1. 4.48 A company that makes food-friendly silicone (for use in cooking and baking pan coatings) is considering four independent projects shown, all of which can be considered to be viable for only 10 years.The company’s MARR is 15% per year. (a) Determine which projects to implement. Financial
9. 4.47 An aggressive stockbroker claims an ability to consistently earn 12% per year on an investor’s money. Believing the broker, you invest$10,000 now, $30,000 three years from now, and $8000 per year for 5 years starting 4 years from now. (a) How much money can you withdraw every year
8. 4.46 Assume that 25 years ago your dad invested $200,000, plus$25,000 in years 2 through 5, and $40,000 per year from year 6 until now. At a very good interest rate of 12% per year, determine (a) the present worth in year 0 (i.e., 25 years ago), and (b) the annual amount that can be withdrawn
7. 4.45 Yvonne’s father was a true believer in “giving back.” He endowed a program 35 years ago to help students receive degrees when they are short on funds. (a) How much money was contributed 35 years ago if it earned at a rate of 10% per year (with no withdrawals) and is now sufficient to
6. 4.44 The president of Biomed Products is considering a 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 payments thereafter.
5. 4.43 A patriotic group of firefighters is raising money to erect a permanent (i.e., infinite life) monument in New York City to honor those killed in the line of duty. The initial cost of the monument will be$1,500,000 and the annual maintenance will cost $5000. There will be an additional
4. 4.42 Compare the alternatives shown on the basis of their capitalized costs using a MARR of 10% per year.Page 134 Table Summary: Table divided into 3 columns with the headings marked from left to right as: Alternative; M;and N.Alternative M N First cost, $ −150, 000 −800, 000 Annual
3. 4.41 Joe and Marylyn Hardwick, both graduates of a small, private university in Vermont, have decided they can contribute $50,000 every 5 years forever to the university, initially during their lives and thereafter through a charitable foundation they have already established. Their contribution
2. 4.40 Determine the capitalized cost of $100,000 now and $50,000 per year in years 1 through infinity at (a) an interest rate of 10% per year, and (b) an interest rate of 10% per year compounded continuously.
1. 4.39 Robert became quite well-to-do as founder and president of Carlson Auto Paint and Supply, Inc. (CAPS). Now, he wants to start a permanent fund to support research directed toward improved sustainability of painted surfaces at his alma mater. He plans to contribute money now so that $100,000
4. 4.38 The Health Department of Winter Park plans to develop an upgraded software system to assist medical personnel in the treatment of opioid-addicted patients. A program cost estimation approach(discussed earlier in section 1.8) has been used to make estimates for a 10-year progam with
3. 4.37 A military unit received two proposals for a project to design, build, and maintain barracks for 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
2. 4.36 Three different plans were presented to the Alphabet Corporation for operating an identity-theft scanning system. 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 of$600,000 each,
1. 4.35 Raytheon, a defense contractor, has been asked by the police department of Middletown to estimate and analyze the life-cycle costs for a proposed drone surveillance system to monitor traffic patterns and congestion within the central thoroughfares of the city. The list includes the
10. 4.34 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 is not yet selected. One
9. 4.33 Akash Uni-Safe in Chennai, India, makes Terminator fire extinguishers. The company needs replacement equipment to form the neck at the top of each extinguisher during production. Select between two metal-constricting machines. Use the corporate MARR of 15% per year with (a) present worth
8. 4.32 Carl and Susan Jacks have invested their savings for some years earning at a rate of 6% per year to purchase, for cash, a mid-sized SUV for their family. After much searching online and several showroom visits, two options are the finalists. The estimates below include all first cost
7. 4.31 Compare the following machines on the basis of their present worth values. Use i = 12% per year. (a) Make the computations using factors. (b) (Spreadsheet exercise) Develop the single-cell functions that display the PW values for the New and Used alternatives.Table Summary: Table divided
6. 4.30 An electric switch manufacturing company has to choose one of three different assembly methods. Method A will have a first cost of$40,000, an annual operating cost of $9000, and a service life of 2 years. Method B will cost $80,000 to buy and will have an annual operating cost of $6000 over
5. 4.29 A sports mortgage is the brainchild of Stadium Capital Financing Group, a company headquartered in Chicago, Illinois. It is an innovative way to finance cash-strapped sports programs by allowing fans to sign up to pay a “mortgage” over a certain number of years for the right to buy good
4. 4.28 Machines that have the following costs are under consideration for a robotized welding process. Use an interest rate of 10% per year and PW analysis to determine which machine should be selected. Show (a)factor, and (b) spreadsheet solutions, as instructed. (c) Use your spreadsheet to
3. 4.27 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 initially and require replacement in 15 years when precipitated solids will have to be removed
2. 4.26 Virgin Galactic is considering two materials for certain parts in a reusable 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 if MARR = 10% per year? (a)
1. 4.25 Two processes can be used for producing a polymer that reduces friction loss in engines. Process T will have a first cost of $700,000, an operating cost of $60,000 per year, and a salvage value of $80,000 after its 2-year life. Process W will have a first cost of $1,350,000, an operating
20. 4.24 An investor believes that future stock market returns are going to decline. Therefore, he decided to invest in some fixed-income securities. 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 yearly.If the investor plans
19. 4.23 Jamal bought a 5%, $1000, 20-year bond for $925. He received semiannual interest for 8 years, then sold it immediately after the 16th interest payment for $800. Did Jamal make the return of 5% per year compounded semiannually that he wanted? Solve using (a) factors, and (b) a spreadsheet.
18. 4.22 An engineer planning for his retirement thinks that the rates of return in the marketplace will decrease before he retires. Therefore, he plans to invest in corporate bonds. He plans to buy a $50,000 bond that has a coupon rate of 12% per year payable quarterly with a maturity date 20
17. 4.21 Navistar Electric issued 1000 debenture bonds 3 years ago with a face value of $5000 each and a bond interest rate of 8% per year payable semiannually. The bonds have a maturity date of 20 years from the date they were issued. If the interest rate in the marketplace is 10%per year
16. 4.20 An investment broker that Ava trusts recommended that she purchase a $50,000, 15-year municipal bond that generates a dividend of 4% per year payable quarterly. She will pay a discounted amount of$45,000 now for the bond. In general, Ava hopes to make 8% per year compounded quarterly on
15. 4.19 In order to retain high-performing engineers, a large semiconductor company provides corporate stock as part of the compensation package.In one particular year, the company offered 1000 shares of either class A or class B stock. The class A stock was selling for $30 per share at the time,
14. 4.18 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 high-speed digital devices. The Professional Plan has an initial fee of $52,000 with annual fees starting
13. 4.17 A metallurgical engineer is considering two materials as the additive to a manufacturing process as shown. Which material should be selected on the basis of a PW comparison at an interest rate of 12% per year?Table Summary: Table divided into 3 columns with the headings marked from left to
12. 4.16 A public water utility is trying to decide between two different sizes of pipe for a new water main. A 250-mm line will have an initial cost of $155,000, whereas a 300-mm line will cost $210,000. Since there is more head loss through the 250-mm pipe, the pumping cost is expected to be
11. 4.15 A new family of small robots are available that have a compact footprint and a large work envelope that provides ease of use and short cycle times. Two are under consideration as part of a process to manufacture blowdown control valves for cooling towers. Process X costs $80,000 initially
10. 4.14 A company that manufactures and markets integrated systems for analysis of genetic variation and function is considering the mutually exclusive projects shown, all of which can be considered to be viable for only 10 years. If the company’s MARR is 15% per year, determine which should be
9. 4.13 PEMEX, Mexico’s petroleum corporation, has an estimated budget for oil and gas exploration that includes equipment for three offshore platforms as shown. Use PW analysis to select the best alternative at a MARR of 15% per year. Select platform X, Y, or Z using (a) tabulated factors, and
8. 4.12 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.
7. 4.11 The Bureau of Indian Affairs provides various services to American Indians and Alaska 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
6. 4.10 The CFO of Marta Aaraña Cement Industries knew 10 years ago that many of the diesel-fueled systems in its quarries would need replacement at an estimated cost of $18 million now. There were two alternative ways to prepare financially for the replacement cost.Alternative A was to build a
5. 4.9 You and your sister just inherited from your grandparents a commercial rental building on the northwest business corridor of a major city. Fortunately, it is fully leased, but it badly needs a new roof.Two types of material can be used on the 1500 square meters of roof surface. Asphalt
4. 4.8 A software package created by Navarro & Associates can be used for analyzing and designing three-sided guyed towers and three- and four-sided self-supporting towers. A single-user license will cost$4000 per year. A site license has a one-time cost of $15,000. A structural engineering
3. 4.7 The manager of a canned-food processing plant is trying to decide between two different labeling machines. The photocell unit will have a first cost of $26,000, an AOC of $4800, and a service life of 4 years.The capacitive sensor unit will cost $32,000 to buy and install and an estimated AOC
2. 4.6 Two methods can be used for producing expansion anchors. Method A costs $80,000 initially and will have a $15,000 salvage value after 3 years. The operating cost with this method will be $30,000 per year.Method B will have a first cost of $120,000, an operating cost of $8000 per year, and a
1. 4.5 You are conducting an evaluation of three mutually exclusive alternatives for a long-term manufacturing process. What time period is required for conducting a present worth analysis if the estimated lives are 3, 4, and 6 years, respectively?Answer
4. 4.4 State two conditions under which the do-nothing alternative is not an option.
3. 4.3 What is meant by do-nothing alternative?Answer
2. 4.2 What is the difference in cash flows between revenue and cost alternatives?
1. 4.1 What is the main difference between mutually exclusive and independent alternatives?Answer
6. Use a spreadsheet to select an alternative by PW analysis.Spreadsheets
5. Select the best independent projects with and without a budget limit.Independent projects
4. Select the best alternative using capitalized cost calculations.Capitalized cost (CC)
3. Select the best of different-life alternatives using present worth analysis.PW of different-life alternatives
2. Evaluate a single alternative and select the best of equal-life alternatives using present worth analysis.PW of equal-life alternatives
1. Identify mutually exclusive and independent projects, and define a revenue and a cost alternative.Formulating alternatives
13. 3.67 Michael is short of money to make his car loan payment this month.He borrows $300 from his brother-in-law and promises to repay $315 when he is paid by his employer at the end of 1 week. He did repay the$315 in exactly 1 week. The effective annual interest rate Michael paid is closest
12. 3.66 The cost of replacing part of a cell phone video-chip production line in 6 years is estimated to be $500,000. At an interest rate of 14%per year compounded semiannually, the uniform amount that must be deposited into a sinking fund every 6 months is closest to:1. $21,335 2. $24,825 3.
11. 3.65 A company that makes flange mount, motorized rotary potentiometers expects to spend $50,000 for a replacement machine 4 years from now. At an interest rate of 12% per year compounded quarterly, the present worth of the machine’s cost is closest to:1. $21,480 2. $28,820 3. $31,160 4.
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