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engineering economy
Engineering Economy 8th edition Leland T. Blank, Anthony Tarquin - Solutions
For the cash flows shown, you have been asked to calculate the present worth (in year 0) using i = 10% per year. Which of the following solutions is not correct?(a) P = 200 + 200(Pˆ•A,10%,3) + 300(Pˆ•A,10%,3)(Pˆ•F,10%,3)(b) P = 200(Pˆ•A,10%,4) +
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 is closest to:(a) $4280(b) $3975(c)
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
If you borrow $24,000 now at an interest rate of 10% per year and promise to repay the loan with payments of $3695 per year starting 1 year from now, the number of payments that you will have to make is closest to:(a) 7(b) 8(c) 11(d) 14
You found a report stating that the equivalent annual worth of chemical costs associated with a water treatment process were $125,000 per year for a 5-year period. The report stated that the cost in year 1 was $190,000 and the cost decreased by a uniform amount each year over that 5-year period.
At a return rate of 20% per year, the amount of money you must deposit for five consecutive years starting 3 years from now for the account to contain $50,000 fifteen years from now is closest to:(a) $1563(b) $1759(c) $1893(d) $2093
You plan to pay $38,000 cash for the new truck you want to buy 5 years from now. You are a very astute investor; all your money earns at 20% per year. If you have already saved $9500, the amount your rich aunt has to give you 2 years from now (as a graduation present) in order for you to have the
For the diagram shown below, the respective values of n to calculate the present worth in year 0 by the equation P0= 100(Pˆ•A,10%,n1) Pˆ•F,10%,n2)are:(a) n1= 6, n2= 1(b) n1= 5, n2= 2(c) n1= 7, n2= 1(d) n1= 7, n2= 2 Po = ? i = 10% Year 3 4 5 100 100 100 100 100 100 2.
An arithmetic gradient has cash flows of $1000 in year 4, $1200 in year 5, and amounts increasing by $200 per year through year 10. If you use the factor 200(P∕G,10%,n) to find PG in year 3, the value of n you have to use in the P∕G factor is:(a) 10(b) 9(c) 8(d) 7
Detrich Products is planning to upgrade an aging manufacturing operation 5 years from now at a cost of $100,000. If the company plans to deposit money into an account each year for 4 years beginning 2 years from now (first deposit is in year 2) to pay for the expansion, the amount of the deposit at
A uniform series of payments begins in year 4 and ends in year 11. If you use the P∕A factor with n = 8, the P value you get will be located in year:(a) 0(b) 3(c) 4(d) 5
The negative arithmetic gradient series in Problem 3.44 is missing the value in year 4. Solve for this value on a spreadsheet. In doing so, display both the full amount of the missing payment and the extra amount over the expected amount of $-1600.Problem 3.44The future worth in year 8 for the cash
Jowel Smithers and Sonda Richards merged all of their financial resources and opened a mobile phone sales and repair business in the upscale Domain Mall in Los Angeles 10 years ago with an initial investment of $2.5 million. As revenues increased significantly over the first 4 years, they took out
For the cash flows shown (in $1000 units), calculate the value of x that makes the present worth in year 0 equal to $300,000 at an interest rate of 10% per year. 5 3 4 Year Cash Flow, $1000 40 40 40 40 40 х х
For the cash flows shown, find the future worth in(a) year 5, and(b) year 4. Assume an i of 10% per year. (This is Problem 3.25 above.) 3 Year 2 5 0 0 3000 3000 3000 3000 Cash Flow, $
(This is Problem 3.19 repeated for spreadsheet solution.) For the cash flows shown, find the value of x that makes the equivalent annual worth in years 1 through 7 equal to $300 per year. Use an interest rate of 10% per year. Start the analysis at x = $300 and use Goal Seek to solve. Cash Flow, $
Hansus Enterprises is a start-up small business specializing in software systems for machinebased high-school student tutoring in science and math. Sheryl Hansus, the owner, has spoken with lenders to obtain a loan of $50,000 now (year 0), and the same amount in years 3 and 6. Two different
The operating cost of a pulverized coal cyclone furnace is expected to be $80,000 per year. The steam produced will be needed for 6 years—now through year 5. Determine the equivalent annual worth, A, in years 1 through 5 of the operating costs at an interest rate of 10% per year.
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; however, beginning in year 7, income decreased by 15% per year each year through year
The City of San Antonio is considering various options for providing water in its 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
Prudential Realty has an escrow account for one of its property management clients that contains $20,000. How long will it take to deplete the account if the client withdraws $5000 now, $4500 one year from now, and amounts decreasing by $500 each year? Assume the account earns interest at a rate of
For the cash flows shown in the diagram, determine the equivalent uniform annual worth over years 1 through 5 at an interest rate of 10% per year. i = 10% per year 3 4 5 Year 350 400 450 500
Find the present worth at time 0 of the chrome plating costs shown in the cash flow diagram. Assume i = 10% per year. P = ? 2 3 4 5 Year 1000 1200 1400 1600 1800 2000
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. If the company increases its deposits beginning in year 6 by 15% per year each year through year
Wrangler Western has some of its jeans stonewashed under a contract with an independent contractor, Almos Garment Corp. If Almos’ operating cost is $22,000 per year for years 1 and 2 and then it increases by 8% per year through year 10, what is the year-zero present worth of the machine operating
Dakota Hi-C Steel signed a contract that will generate revenue of $210,000 now, $226,800 in year 1, and amounts increasing by 8% per year through year 5. Calculate the future worth of the contract at an interest rate of 8% per year. Also, develop the FV function that will correctly determine F for
Calculate the present worth of all costs for a newly acquired machine with an initial cost of $29,000, no trade-in value, a life of 10 years, and an annual operating cost of $13,000 for the first 4 years, increasing by 10% per year thereafter. Use an interest rate of 10% per year.
United Fruits now offers volume discounts by the 10-kilogram (10-kilo) pack to small, as well as large, supermarket chains for organically grown in-season fruit shipped directly from the orchard. Over the last 8 years, the food market chain Coop- For All has purchased the number of 10-kilo packs
The annual worth for years 1 through 8 of the cash flows shown is $30,000. What is the amount of x, the cash flow in year 3, at i = 10% per year? Solve using(a) Tabulated factors, and(b) A spreadsheet. 2 3 4 5 2000 2200 х 2x 2800 3000 3200 3400
The future worth in year 8 for the cash flows shown is $20,000. At an interest rate of 10% per year, what is the value, x, of the cash flow in year 4? 3 1000 1200 1400 1800 2000 2200 2400 4. 2.
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 optimistically hopes to recover its investment in 5 years on a single contract beginning immediately (year 0). The
Nippon Steel’s expenses for heating and cooling a large manufacturing facility are expected to increase according to an arithmetic gradient beginning in year 2. If the cost is $550,000 this year (year 0) and will be $550,000 again in year 1, but then are estimated to increase by $40,000 each year
A build-to-operate (BTO) company signed a contract to operate Alamosa County industrial wastewater treatment plants for the next 20 years. The contract will pay the company $2.5 million now and amounts increasing by $200,000 each year through year 20. At an interest rate of 10% per year, what is
Silastic-LC-50 is a liquid silicon rubber designed to provide excellent clarity, superior mechanical properties, and short cycle time for high speed manufacturers. One high-volume manufacturer used it to achieve smooth release from molds. The company’s projected growth will result in silicon
The following series of revenues and expenses in $1000 units were recorded by a mobile phone business. At a return rate of 10% per year, (a) Determine the net future worth in year 10.(b) Did the owners make their expected 10% return? How do you know? Year Revenues, $ Expenses, $ -2500 1-4 700
A recently hired CEO (chief executive officer)wants to reduce future production costs to improve the company’s earnings, thereby increasing the value of the company’s stock. The plan is to invest $70,000 now and $50,000 in each of the next 2 years to improve productivity. By how much must
A 5-year plan to raise extra funds for public schools involves an “enrichment tax” that will raise $56 for every student the first year, increasing by $1 per student per year thereafter. There are 50,000 students in the district in year one, 51,000 in year 2, with increases of 1000 students per
El Paso Water is planning to install wind turbines to provide enhanced evaporation of reverse osmosis concentrate from its inland desalting plant. The company will spend $1.5 million in year 1 and $2 million in year 2. Annual maintenance is expected to cost $65,000 per year through year 10.
Marcia observed the following cash flow series (in $1000 units) in an accounting report at work. The actual amounts in years 1 and 4 are missing; however, the report states that the present worth in year 0 was $300,000 at an interest rate of 10% per year. Calculate the value of x.
A company that manufactures air-operated drain valve assemblies currently has $85,000 available to pay for plastic components over a 5 year period. If the company spent only $42,000 in year 1, what uniform annual amount can the company spend in each of the next 4 years to deplete the entire budget?
Find the present worth for the following cash flow series (in $1000 units). i= 6% per year 8 Year 3 4 5 6. 90 90 90 90 100 90 200 200 4.
A company that utilizes carbon fiber 3-D printing wants to have money available 2 years from now to add new equipment. The company currently has $650,000 in a capital account and it plans to deposit $200,000 now and another $200,000 one year from now. The total amount available in 2 years, provided
The simple interest rate per year that will accumulate the same amount of money in 2 years as a compound interest rate of 20% per year is closest to:(a) 20.5%(b) 21%(c) 22%(d ) 23%
The compound interest rate per year that amounts of $1000 one year ago and $1345.60 one year hence are equivalent to is closest to:(a) 8.5% per year(b) 10.8% per year(c) 20.2% per year(d ) None of the above
At a compound interest rate of 10% per year, the amount that $10,000 one year ago is equivalent to now is closest to:(a) $8264(b) $9091(c) $11,000(d ) $12,100
The time it would take for money to double at a simple interest rate of 5% per year is closest to:(a) 10 years(b) 12 years(c) 15 years(d ) 20 years
All of the following mean the same as Minimum Attractive Rate of Return except:(a) Hurdle rate(b) Inflation rate(c) Benchmark rate(d) Cutoff rate
All of the following are noneconomic attributes except:(a) Sustainability(b) Morale(c) Taxes(d) Environmental acceptability
Another name for noneconomic attributes is:(a) Sustainability(b) Intangible factors(c) Equivalence(d) Evaluation criteria
All of the following are examples of noneconomic factors except:(a) Availability of resources(b) Goodwill(c) Customer acceptance(d) Profit
State University tuition and fees can be paid using one of two plans. Early-bird: Pay total amount due one year in advance and get a 10% discount.On-time: Pay total amount due when classes start. If the cost of tuition and fees is $20,000 per year,(a) How much is paid in the early-bird plan, and(b)
Bull Built, a design/build engineering company that has always given year-end bonuses in the amount of $4,000 to each of its engineers, is having cash flow problems. The president said that although Bull Built couldn’t give bonuses this year, next year’s bonus would be large enough to make up
The annual cash flows (in $1000 units) for Browning Brothers Glass Works are summarized.(a) Determine the total net cash flow over the 5 years.(b) Calculate the percentage of revenues represented by expenses for each year. Year 3 2 685 Revenue, $ Expenses, $ 804 929 521 650 789 623 599 610 815
Identify the following as cash inflows or outflows to a privately-owned water company: well drilling, maintenance, water sales, accounting, government grants, issuance of bonds, energy cost, pension plan contributions, heavy equipment purchases, used equipment sales, stormwater fees, and discharge
Stefanie is a design engineer with an international railroad locomotive manufacturing company in the state of Illinois. Management wants to return some of the engineering design work to the United States rather than export all of it to India, where their primary design work have been accomplished
For the cash flows shown, calculate the future worth in year 8 at i = 10% per year. Year Cash Flow, $ 800 800 800 800 500 500 500
For the cash flows shown, calculate the future worth in year 9 using i = 10% per year. 3 4 Year 2 5 Cash Flow, $| 200 200 200 200 300 300 300
For the cash flows shown, find the future worth in (a) Year 5,(b) Year 4. Assume an i of 10% per year. 3 2 Year 5 0 0 3000 3000 3000 3000 Cash Flow, $
A manufacturer of industrial grade gas handling equipment wants to have $500,000 in an equipment replacement contingency fund 10 years from now. If the company plans to deposit a uniform amount of money each year beginning now and continuing through year 10 (total of 11 deposits), what must be the
How much money would be accumulated 18 years from now from deposits of $15,000 per year for five consecutive years, starting 3 years from now, if the interest rate is 8% per year?
Calculate the equivalent future cost in year 10 for the following series of disbursements at an interest rate of 10% per year. Also, write a single-cell spreadsheet function that will determine the future worth. Disbursement, $ Year Disbursement, $ Year 5 4000 4000 6. 5000 4000 5000 3 4000 5000 4 4
Lifetime Savings Accounts, known as LSAs, allow people to invest after tax money without being taxed on any of the gains. If an engineer invests $10,000 now and $10,000 each year for the next 20 years, how much will be in the account immediately after the last deposit, provided the account grows by
Kenworth Imaging got a $700,000 loan that came with a choice of two different repayment schedules. In Plan 1, the company would have to repay the loan in 4 years with four equal payments at an interest rate of 10% per year. In Plan 2, the company would repay the loan in 3 years, with each payment
For the cash flows shown, find the value of x that makes the equivalent annual worth in years 1 through 7 equal to $300 per year. Use an interest rate of 10% per year. Cash Flow, $ Cash Flow, $ Year Year 300 х 5 300 300 2 300 300 3 300 х
An entrepreneurial electrical engineer has approached a large utility with a proposal that promises to reduce the utility’s power bill by at least 15% per year for the next 5 years through installation of patented surge protectors. The proposal states that the engineer will get $20,000 now and
The operating cost for a pulverized coal cyclone furnace is expected to be $80,000 per year. The steam produced will be needed for only 6 years beginning now (i.e., years 0 through 5). What is the equivalent annual worth in years 1 through 5 of the operating cost at an interest rate of 10% per year?
How much will Kingston Technologies have to pay each year in eight equal payments, starting 2 years from now, to repay a $900,000 loan? The interest rate is 8% per year.
Improvised explosive devices (IEDs) are responsible for many deaths in times of strife and war. Unmanned ground vehicles (robots) can be used to disarm the IEDs and perform other tasks as well. If the robots cost $140,000 each and the Military Arms Unit signs a contract to purchase 4000 of them now
What is the equivalent annual cost in years 1 through 7 of a contract that has a first cost of $70,000 in year 0 and annual costs of $15,000 in years 3 through 7? Use an interest rate of 10% per year.
AutomationDirect, which makes 6-inch TFT color touch screen HMI panels, is examining its cash flow requirements for the next 5 years. The company expects to replace office machines and computer equipment at various times over the 5-year planning period. Specifically, the company expects to spend
Determine the equivalent annual worth for years 1 through 10 of a uniform series of payments of $20,000 that begins in year 3 and ends in year 10. Use an interest rate of 10% per year. Also, write the single-cell spreadsheet function to find A.
A large water utility is planning to upgrade its SCADA system for controlling well pumps, booster pumps, and disinfection equipment for centralized monitoring and control. Phase I will reduce labor and travel costs by $28,000 per year. Phase II will reduce costs by an additional $20,000 per year,
Centrum Water & Gas provides standby power to pumping stations using diesel-powered generators. An alternative is the use of natural gas to power the generators, but it will be a few years before the gas is available at remote sites. Centrum estimates that by switching to gas, it will save
Pittsburgh Custom Products (PCP) purchased a new machine for ram cambering large I beams. PCP expects to bend 80 beams at $2000 per beam in each of the first 3 years, after which it expects to bend 100 beams per year at $2500 per beam through year 8. If the company’s minimum attractive rate of
Because unintended lane changes by distracted drivers are responsible for 43% of all highway fatalities, Ford Motor Co. and Volvo launched a program to jointly develop a technology to prevent accidents by sleepy or distracted drivers. A device costing $260 tracks lane markings and sounds an alert
Industrial Electric Services has a contract with an Embassy in Mexico to provide maintenance for scanners and other devices in the building. What is the present worth of the contract (in year 0) if the company will receive a total of nine $12,000 payments beginning in year 2 and ending in year 10
A proximity sensor attached to the tip of an endoscope could reduce risks during eye surgery by alerting surgeons to the location of critical retinal tissue. If an eye surgeon expects that by using this technology he may avoid lawsuits of $0.6 and $1.35 million 2 and 5 years from now, respectively,
A maker of micromechanical systems can reduce product recalls by 10% with the installation of new packaging equipment. If the cost of the new equipment is expected to be $40,000 four years from now, how much could the company afford to spend now (instead of 4 years from now) at a minimum attractive
A commercial real estate developer plans to borrow money to finance an upscale mall in an exclusive area of the city. The developer plans to get a loan that will be repaid with uniform payments of $400,000 over a 15 year period beginning in year 2 and ending in year 15. How much will a bank be
Aero Serve, Inc. manufactures cleaning nozzles for reverse pulse jet dust collectors. The company spent $40,000 on a production control system that will increase profits by $11,096 per year for 5 years. The rate of return per year on the investment is closest to:(a) 20%(b) 16%(c) 12%(d) Less than
Maintenance costs for a regenerative thermal oxidizer increased according to an arithmetic gradient for 5 years. The cost in year 1 was $7000. If the interest rate is 10% per year and the present worth of the costs for a 5-year period was $28,800, the amount of the yearly increase, G, was closest
The winner of a multistate mega millions lottery jackpot worth $175 million was given the option of taking payments of $7 million per year for 25 years, beginning 1 year from now, or taking $109.355 million now. The interest rate that renders the two options equivalent to each other is closest
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
At i = 8% per year, the annual worth for years 1 through 6 of the cash flows shown is closest to:(a) $302(b) $421(c) $572(d) $824 Years 1 2 4 5 300 400 500 600 700 800 3.
The present worth of an increasing geometric gradient is $23,632. The interest rate is 6% per year and the rate of change series is 4% per year. If the cash flow in year 1 is $3,000, the year in which the gradient ends is:(a) 7(b) 9(c) 11(d) 12
The Gap has some of its jeans stone-washed under a contract with Vietnam Garment Corporation (VGC). If VGC’s estimated operating cost per machine is $26,000 for year 1 and it increases by $1500 per year through year 5, the equivalent uniform annual cost per machine over years 1 to 5, at an
The cost of tuition at a large public university was $390 per credit hour 5 years ago. The cost today (exactly 5 years later) is $585. The annual rate of increase is closest to:(a) 5%(b) 7%(c) 9%(d) 11%
An engineer who believes in “save now; play later” wants to retire in 30 years with $2.0 million. At 8% per year interest, the amount the engineer will have to invest each year (starting in year 1) to reach the $2 million goal is closest to:(a) $17,660(b) $28,190(c) $49,350(d) $89,680
A chip manufacturing company wants to have $10 million available 5 years from now in order to build new warehouse and shipping facilities. If the company can invest money at 10% per year, the amount that it must deposit each year in years 1 through 5 to accumulate the $10 million is closest to:(a)
A single deposit of $25,000 was made by your grandparents on the day you were born 25 years ago. The balance in the account today if it grew at 10% per year is closest to:(a) $201,667(b) $241,224(c) $270,870(d) $296,454
The cost of updating an outdated production process is expected to be $81,000 four years from now. The equivalent present worth of the update at 6% per year interest is closest to:(a) $51,230(b) $55,160(c) $60,320(d) $64,160
The amount of money the Teachers Credit Union should be willing to loan a developer who will repay the loan in a lump sum amount of $840,000 two years from now at the bank’s interest rate of 10% per year is:(a) $694,180(b) $99,170(c) $1,106,400(d) $763,650
A manufacturer of prototyping equipment wants to have $3,000,000 available 10 years from now so that a new product line can be initiated. If the company plans to deposit money each year, starting 1 year from now, the equation that represents how much the company is required to deposit each year at
The SEWA (Southwestern Electricity and Water Authority) authorized construction projects totaling $1.07 million to improve desalinization plant efficiency and salinity reduction technology for reject chemicals. Three bids from potential vendors were received in the amounts of $1.06, $1.053, and
For the data in Problem 2.60, find the year that your retirement account first exceeds(a) $2 million, and(b) Then $3 million. In setting up the spreadsheet you wish to know the amount that must be deposited each year. Use any spreadsheet functions that you choose.
Apple Computer wants to have $2.1 billion available 5 years from now in order to finance initial production of a device that applies IOT technology for home use. The company expects to set aside uniformly increasing amounts of money each year to meet its goal, starting with $100 million at the end
You expect to contribute to an investment fund for your retirement over the next 30 years with an annual deposit of a yet-to-be determined amount. Assume your goal is to have $2 million available when you stop the annual desposits and that the fund is able to return 10% per year every year.(a)
A solar-powered personal aircraft with VTOL capability has been under development for the past 30 years by a group of engineers and physicists. SPPAV, as the plane will be termed, is expected to be available for its final test flight in exactly 3 years from now. Over the previous 30 years, a total
You are a well-paid engineer with a well-established international corporation. In planning for your retirement, you are optimistic and expect to make an investment of $10,000 in year 1 and increase this amount by 10% each year. How long will it take for your account to have a future worth of
A trusted friend told you that a cash flow sequence that started at $3000 in year 1 and increased by $2000 each year would be worth $15,000 in 12 years at a rate of return of 10% per year. Is she correct?
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