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engineering economy
Engineering Economy 8th edition Leland T. Blank, Anthony Tarquin - Solutions
An engineer collected monthly operating expenses for the past 3 years for a micro-finishing department. Use the midpoints of each range in preparing your answers.(a) Develop a plot of the probability distribution by hand or using a spreadsheet, as instructed.(b) What is the probability that a
The net revenue R for a newly developed antifungal spray for citrus fruit is expected to be $3.1 million per year for the next 5 years. This expected amount is based on estimates that R could be $2.6, $2.8, $3.0, $3.2, $3.4 million, all with the same probability, or $3.6 million with half the
A discrete variable Q, extra inventory units, has integer values from 1 to 10. When sampled 100 times, the following observed probability distribution was obtained:(a) Determine the sample average and standard deviation by hand.(b) Determine the sample average and standard deviation by
When single-value or single-point estimates are used exclusively in an economic analysis, the decision-making process is said to be:(a) Probabilistic(b) Uncertain(c) Deterministic(d) Monte Carlo
The shipping costs for fresh fruit items have been estimated and assigned the probabilities shown below. The expected value of the shipping costs is closest to:(a) $36.33(b) $39.21(c) $41.28(d) $45.11 Shlpping Cost, $ 38 34 55 0.22 0.31 0.47 Probability
In a table of two-digit random numbers, the probabilities of 0.16 to 0.20 can be represented by the numbers:(a) 16 to 20(b) 0 to 4(c) 1 to 5(d) 15 to 19
The following temperatures (in oF) were recorded inside the building of a remote pumping station: 99, 87, 93, 90, and 96. The variance of these readings is closest to:(a) 11.7(b) 22.5(c) 31.1(d) 38.6
For the income and probability values shown, the probability that the income in any year will be greater than $8500 is closest to:(a) 0.38(b) 0.49(c) 0.70(d) 0.92 Income, $/Year | 6,200 8,500 9,600 10,300 12,600 15,500 0.15 0.23 0.32 0.09 Probability 0.04 0.24
The net revenue from a candy product called Mummies- Lite has averaged $15,000 per month for the past 12 months. If the value of Σ(Xi −X̅)2 is $4,680,000, the standard deviation value is closest to:(a) $381(b) $652(c) $958(d) $1265
The dispersion of values about the sample average is represented by the:(a) Variance(b) Expected value(c) Probability distribution(d) Standard deviation
For the nonconventional net cash flow series shown, the external rate of return per year using the MIRR method, with an investment rate of 20% per year and a borrowing rate of 8% per year, is closest to:(a) 10.8%(b) 12.0%(c) 14.8%(d) 16.7% 2 3 Year 4 NCF, $ -40,000 +13,000 -29,000 +25,000 +50,000
Five years ago, an alumnus of a university donated $50,000 to establish a permanent endowment for scholarships. The first scholarships were awarded 1 year after the contribution. If the amount awarded each year, that is, the interest on the endowment, is $4500, the rate of return earned on the fund
A bulk materials hauler purchased a used dump truck for $50,000 two years ago. The operating costs have been $5000 per month and revenues have averaged $7500 per month. The truck was just sold for $11,000. The rate of return is closest to:(a) 2.6% per month(b) 2.6% per year(c) 3.6% per month(d)
An investment of $60,000 ten years ago resulted in uniform income of $10,000 per year for the 10-year period. The rate of return on the investment was closest to:(a) 10.6% per year(b) 14.2% per year(c) 16.4% per year(d) 18.6% per year
Basset, a furniture manufacturing company, borrowed $1 million and repaid the loan through monthly payments of $20,000 for 2 years plus a single lump-sum payment of $1 million at the end of 2 years. The interest rate on the loan was closest to:(a) 0.5% per month(b) 2% per month(c) 2% per year(d) 8%
A $10,000 mortgage bond that is due in 20 years pays interest of $250 every 6 months. The bond coupon rate is:(a) 2.5% per year, payable quarterly(b) 5.0% per year, payable quarterly(c) 5% per year, payable semiannually(d) 10% per year, payable quarterly
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:(a) $1400 per year(b) $1400 per quarter(c) $350 per year(d)
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(a) $10,000(b) $20,000(c) $30,000(d) $40,000
For the nonconventional net cash flow series experienced over the first 3 years of operation by Viking, Inc., an Internet-based sports boat and ski equipment sales company, perform a thorough ROR analysis for the owners, Julie Merkel and Carl Upton, to include the following:(a) Application of sign
Ten years ago, JD and his colleagues resigned from a major aerospace corporation, after many years of salaried employment, to form JRG Solar, Inc. with the intent to make a significant impact on the international renewable energy market based on years of design and test work in neighborhood garages
Charles Enterprises got into the drone manufacturing business at the inception of the technology. Net cash flows (in $ million units) for years 0 through 5 had its ups and downs as shown below. However, a few years ago, Charles started selling 3-D printable, disposable drones that can be printed,
An Australian steel company, ASM International, claims that a savings of 40% of the cost of stainless steel threaded bar can be achieved by replacing machined threads with precision weld depositions. A U.S. manufacturer of rock bolts and grout-in-fittings plans to purchase the equipment. A
Determine the following for the quarterly cash flow estimates.(a) i* value or values;(b) If an MARR of 5% per quarter is achievable; and(c) The minimum revenue in quarter 8 that will generate an i* that meets the MARR. Expenses, $ Revenues, $ Quarter -20 -20 5 - 10 - 10 - 10 - 10 10 3 25 4 26 5 20
You need to determine i* per year for the cash flows shown below. Since you have a new boss, you decided to perform a thorough analysis. Do the following:(a) Use a spreadsheet to find i*.(b) Develop two charts on the spreadsheet: a column chart that plots cash flows versus year, and a scatter chart
Cloey has just purchased new bedroom furniture from Haverty’s for a total of $10,000. She paid 20% down and, through a special promotional, she can pay off the $8000 in ten $800, no-interest payments over the next 10 months. The smaller print at the bottom of the contract states that if any of
Ten years ago, DEWA, an electricity and water authority, issued $20 million worth of municipal bonds that carried a coupon rate of 6% per year, payable semiannually. The bonds had a maturity date of 25 years. Due to a worldwide recession, interest rates dropped significantly enough for the utility
A savvy investor paid $6000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 8% per year, payable quarterly. Three years after he purchased the bond, market interest rates went down, so the bond increased in value. If the investor sold the bond for $11,500 three years after he
A $10,000 mortgage bond with a bond interest rate of 8% per year, payable quarterly, was purchased for $9200. The bond was kept until it was due, a total of 7 years. What rate of return was made by the purchaser per 3 months and per year (nominal)?
Janice V. bought a 5% $1000 twenty-year bond for $925. She received a semiannual dividend for 8 years, then sold it immediately after the 16th dividend for $800. What rate of return did she make(a) Per semiannual period, and(b) Per year (nominal)?
An engineer planning for his child’s college education purchased a zero coupon corporate bond (i.e., a bond that has no dividend payments) for $9250. The bond has a face value of $50,000 and is due in 18 years. If the bond is held to maturity, determine the i* for the investment.
A mortgage bond issued by Automation Engineering is for sale for $8200. The bond has a face value of $10,000 with a coupon rate of 8% per year, payable annually. What rate of return will be realized if the purchaser holds the bond to maturity 5 years from now?
If you receive a $5000 bond as a graduation present and the bond will pay you $75 interest every 3 months for 20 years, what is the bond coupon rate?
The Martian Corporation, a space vehicle development company, is starting a new division that will develop the next generation launch missile engine configuration. Use a hand application of the MIRR method to determine the EROR for the estimated net cash flows (in $1000 units) of $−50,000 in year
For the nonconventional net cash flow shown, determine the external rate of return using the MIRR method at a borrowing rate of 10% per year and an investment rate of(a) 15% per year, and(b) 30% per year. See Problem 7.60 for a thorough spreadsheet based analysis of this series.Data from problem
A new advertising campaign by a company that manufactures products that apply biometric, surveillance, and satellite technologies resulted in the cash flows shown. Calculate unique external rate of return values using(a) The ROIC method with an investment rate of 30% per year, and(b) The MIRR
For the net cash flow series shown,(a) Apply the two rules of sign change,(b) Find the external rate of return using the ROIC method at an investment rate of 15% per year, and(c) Determine an i* using the IRR function with and without the ROIC determined in part (b).Year
For the cash flows shown, determine:(a) The number of possible i* values(b) The i* value displayed by the IRR function(c) the external rate of return using the MIRR method if ii = 18% per year and ib = 10% per year. 3 4000 4 2 Year Revenues, $ Costs, $ 18,000 25,000 19,000 -6000 -30,000 -7000 -6000
For the net cash flow series,(a) Determine the number of possible i* values using the two sign tests, (b) find the EROR using the MIRR method with an investment rate of 20% per year and a borrowing rate of 10% per year, and(c) Use the MIRR function to find the EROR. 5 6 2 4 3 Year Net Cash
Profit and loss (in $1000 units) associated with the sale of a vision guided machine tool loading system and the resulting NCF amounts are recorded.(a) Use sign-change rules to determine the possible number of i* values.(b) Find all i* values between 0 and 100%.(c) If the required MARR for the
Arc-bot Technologies, manufacturers of six-axis, electric servo-driven robots, has experienced the cash flows shown in a shipping department. (a) Determine the number of possible rate of return values.(b) Find all i* values between 0 and 100%. Expense, $ Savings, $ Year -33,000 1 -15,000
A third-year college friend of yours opened Mike’s Bike Repair Shop when he was a freshmen working on a sociology degree. He shared his NCF figures for the 3 years, including the $17,000 amount that it took to get started in business.(a) Determine the number of possible rate of return values.(b)
RKI Instruments manufactures a ventilation controller designed for monitoring and controlling carbon monoxide in parking garages, boiler rooms, tunnels, etc. The net cash flow associated with one plant for the first 3 years of operation is shown.(a) What do the two rules about sign changes indicate
A cutting-edge product of Continental Fan had the following net cash flow series (in $1000 units) during its first 5-year period on the market. Find all rate of return values between 0% and 100%.Year .................................... Net Cash Flow, $0 ...........................................
Jenco Electric manufactures washdown adjustable speed drives in open loop, encoderless, and closedloop servo configurations. The net cash flow associated with one phase of the production operation is shown below.(a) Determine the possible rate of return values according to the rule of signs.(b)
One of your employees presented you the cash flow estimates (in $1000 units) for a new method of manufacturing box cutters for a 2 year period.(a) Apply the rule of signs to determine the maximum number of possible i* values at aMARR of 5% per quarter.(b) Apply Norstrom€™s criterion to
Self-tightening wedge grips are designed for tensile testing applications up to 1200 pounds. The cash flows associated with the product are available below. Determine the following from these values: net cash flow series, cumulative cash flow series, and i* displayed by the IRR spreadsheet
The annual revenues (in $1000 units) associated with several large apartment complexes are $0, $350, $290, $460, $150, and $320 for years 0, 1, 2, 3, 4, and 5, respectively. Determine(1) Whether each cash flow series is conventional or nonconventional,(2) The maximum number of real-number roots,
Identify the net cash flows shown below as either conventional or nonconventional. 1 Year (a) (b) (c) 2 3 4 5 - 100 400 300 200 100 40 -50 -50 -50 40 40 300 200 - 1000 200 300 400 10,000 -2000 (d) (e) -6000 -500 -500 50 -750 -10 50 50 50
Identify the following net cash flow series as conventional or non conventional. Sign on Net Cash Flow by Year Year 2 3 4 (a) (b) (c) (d) (e) I +I + + || + + | + || + + + OII + + I
What cash flows are associated with Descartes’ rule of signs and Norstrom’s criterion?
An Indium-Gallium-Arsenide-Nitrogen alloy developed at Sandia National Laboratory is said to have potential uses in electricity generating solar cells. The new material is expected to have a longer life, and it is believed to have a 40% efficiency rate, which is nearly twice that of standard
Army Research Laboratory scientists developed a diffusion-enhanced adhesion process which is expected to significantly improve the performance of multifunction hybrid composites. NASA engineers estimate that composites made using the new process will result in savings in space exploration projects.
A plaintiff in a successful lawsuit was awarded a judgment of $4800 per month for 5 years. The plaintiff has the need of a fairly large sum of money immediately for an investment of his own, and has offered the defendant the opportunity to pay off the award in a lump-sum amount of $110,000. If the
Aloma, a university graduate who started a successful business, wants to start an endowment in her name that will provide scholarships to IE students. She wants the scholarship to provide $10,000 per year and expects the first one to be awarded on the day she fulfills the endowment obligation. If
Steel cable barriers in highway medians are a lowcost way to improve traffic safety without overstressing department of transportation budgets. Cable barriers cost $44,000 per mile, compared with $72,000 per mile for guardrail and $419,000 per mile for concrete barriers. Furthermore, cable barriers
Barron Chemical uses a thermoplastic polymer to enhance the appearance of certain RV panels. The initial cost of one process was $130,000 with annual costs of $49,000 and revenues of $78,000 in year 1, increasing by $1000 per year. A salvage value of $23,000 was realized when the process was
A broadband service company borrowed $2 million for new equipment and repaid the loan in amounts of $200,000 in years 1 and 2 plus a lumpsum amount of $2.2 million at the end of year 3. What was the interest rate on the loan?
Swagelok Enterprises is a manufacturer of miniature fittings and valves. Over a 5-year period, the costs associated with one product line were as follows: first cost of $30,000 and annual costs of $18,000. Annual revenue was $27,000 and the used equipment was salvaged for $4000. What rate of return
What rate of return per month will an entrepreneur make over a 2½-year project period if he invested $150,000 to produce portable 12-volt air compressors? His monthly costs are $27,000 and his revenues are $33,000.
Over a 7-year period, the number of uninsured motorists in New Mexico dropped from 33% to 10% because an up-to-date computer database allowed the state to better police its requirements for car and truck liability insurance. Assuming the decrease occurred uniformly and compounded annually, what was
Jamison Specialties manufactures programmable incremental encoders that resist shock and vibration for use in harsh environments. Five years ago, the company invested $650,000 in an automated quality control system and recorded savings of $105,000 per year for the 5 years. The equipment now has a
Determine the rate of return for the following cash flow series. 12,000 i = ? 1 2 3 4 5 6 7 Year 100 100 100 300 300 300 300 4000
The Camino Real Landfill was required to install a plastic liner to prevent leachate from migrating into the groundwater. The fill area was 50,000 m2 and the installed liner cost was $8 per m2. In order to recover the investment, the owner charges to unload at the rates of $10 per pick-up, $25 per
Determine i* per year for the cash flows shown using factors and the IRR function. See Problem 7.55 for additional spreadsheet work with this series. 3 2 Year Cash Flow, $ 0 -80,000 9000 70,000 30,000
Use factors and a spreadsheet to determine the interest rate per period from the following equation:0 = −40,000 + 8000(P∕A,i*,5) + 8000(P∕F,i*,8)
If a manufacturer of electronic devices invests $650,000 in equipment for making compact piezoelectric accelerometers for general purpose vibration measurement, estimate the rate of return from revenue of $225,000 per year for 10 years and $70,000 in salvage value from the used equipment sale in
The production of polyamide from raw materials of plant origin, such as castor oil, requires 20% less fossil fuel than conventional production methods. Darvon Chemicals borrowed $6 million to implement the process. If the interest rate on the loan is 10% per year (on unrecovered balance) for 10
A small industrial contractor purchased a warehouse building for storing equipment and materials that are not immediately needed at construction job sites. The cost of the building was $100,000 and the contractor has just made an agreement with the seller to finance the purchase over a 5-year
Spectra Scientific of Santa Clara, CA manufactures Q-switched solid state industrial lasers for LED substrate scribing and silicon wafer dicing. The company got a $60 million loan to be repaid over a 5-year period at 8% per year interest. Determine the amount of the unrecovered balance of the
A to Z Mortgages made a home equity loan to your friend. For a 4-year loan of $10,000 at 10% per year, what annual payment must he make to pay off the entire loan in 4 years if interest is charged on(a) The original principal amount of $10,000, and(b) The unrecovered balance?(c) What is the
A $10,000 loan amortized over 5 years at an interest rate of 10% per year requires payments of $2638 to completely remove the loan when interest is charged on the unrecovered balance of the principal. If interest is charged on the original principal instead of the unrecovered balance, what is the
What is(a) The highest, and(b) Lowest rate of return (in percent) possible?
An A&E firm planning for a future expansion deposited $40,000 each year for 5 years into a sinking (investment) fund that was to pay an unknown rate of return. If the account had a total of $451,000 immediately after the fifth deposit, what rate of return did the company make on these deposits?
Your grandmother deposited $10,000 in an investment account on the day you were born to help pay the tuition when you go to college. If the account was worth $50,000 seventeen years after she made the deposit, what was the rate of return on the account?
A start-up company that makes robotic hardware for CIM (computer integrated manufacturing) systems borrowed $1 million to expand its packaging and shipping facility. The contract required the company to repay the lender through an innovative mechanism called “faux dividends,” a series of
A northern California consulting firm wants to start saving money for replacement of network servers. If the company invests $5000 at the end of year 1 but decreases the amount invested by 5% each year, how much will be available 5 years from now at an earning rate of 8% per year?
A civil engineer planning for her retirement places 10% of her salary each year into a high-technology stock fund. If her salary this year (end of year 1) is $160,000 and she expects her salary to increase by 3% each year, what will be the future worth of her retirement fund after 15 years provided
To improve crack detection in military aircraft, the Air Force combined ultrasonic inspection procedures with laser heating to identify fatigue cracks. Early detection of cracks may reduce repair costs by as much as $200,000 per year. If the savings start at the end of year 1 and increase by 3%
Calculate the present worth of a geometric gradient series with a cash flow of $35,000 in year 1 and increases of 5% each year through year 6. The interest rate is 10% per year.
A company that manufactures purgable hydrogen sulfide monitors will make deposits such that each one is 7% larger than the preceding one. How large must the first deposit at the end of year 1 be if the deposits extend through year 10 and the fourth deposit is $5550? Use an interest rate of 10% per
The future worth in year 10 of an arithmetic gradient cash flow series for years 1 through 10 is $500,000. If the gradient increase each year, G, is $3,000, determine the cash flow in year 1 at an interest rate of 10% per year.
Tacozza Electric, which manufactures brush dc servo motors, budgeted $95,000 per year to pay for specific components over the next 5 years. If the company expects to spend $55,000 in year 1, how much of a uniform (arithmetic) increase each year is the company expecting in the cost of this part?
Apple Computer wants to have $2.1 billion available 5 years from now in order to finance initial production of a device that, based on your behavior, will learn how to monitor and control nearly all of the electronic devices in your home, such as thermostat, coffee pot, TV, sprinkler system, etc.
For the cash flows below determine the amount in year 1, if the annual worth in years 1 through 9 is $3500 and the interest rate is 10% per year. 1 2 4 5 6 7 3 Year Cost, A A+40A+80A+120 A+160 A+200 A+240 A+280 A+320 $1000
For the cash flow revenues shown below, find the value of G that makes the equivalent annual worth in years 1 through 7 equal to $500. The interest rate is 10% per year. Cash Flow, $ Year Year Cash Flow, $ 4 200 + 3G 200 + 4G 200 200 + G 200 + 5G 3 200 + 6G 200 + 2G 6) 2.
Solar Hydro manufactures a revolutionary aeration system that combines coarse and fine bubble aeration components. This year (year 1) the cost for check valve components is $9,000. Based on closure of a new contract with a distributor in China and volume discounts, the company expects this cost to
NMTeX Oil owns several gas wells in Carlsbad, NM. Revenue from the wells has been increasing according to an arithmetic gradient for the past 5 years. The revenue in year 1 from well no. 24 was $390,000 and it increased by $15,000 each year thereafter. Determine(a) The revenue in year 3, and(b) The
An arithmetic cash flow gradient series equals $500 in year 1, $600 in year 2, and amounts increasing by $100 per year through year 9. At i = 10% per year, determine the present worth of the cash flow series in year 0.
Determine the numerical value of the following factors using(a) Linear interpolation,(b) The formula, and(c) The spreadsheet function from Figure 2-9.1. (Pˆ•F,8.4%,15)2. (Aˆ•F,17%,10)Figure 2.9 i = 3.25% 25.00 Value obtained Value with this function Factor 4 0.44952=
The cost of a fence that can detect poacher intrusion into a National Wildlife Preserve is $3 million per mile. If the effective life of the fence is 10 years, determine the equivalent annual cost of a 10-mile long fence at an interest rate of 8% per year.
The Public Service Board (PSB) awarded two contracts worth a combined $3.07 million to increase the depth of a retention basin and reconstruct a spillway that was severely damaged in a flood 2 years ago. The PSB president stated that, surprisingly, the bids were $1,150,000 lower than PSB engineers
Durban Moving and Storage wants to have enough money available 5 years from now to purchase a new tractor-trailer. If the estimated cost is $250,000, how much should the company set aside each year if the funds earn 9% per year?
American Gas Products manufactures a device called a Can-Emitor that empties the contents of old aerosol cans in 2 to 3 seconds. This eliminates the need to dispose of the cans as hazardous waste. If a paint manufacturing company can save $90,000 per year in waste disposal costs, how much could the
Stanley, Inc. makes self-clinching fasteners for stainless steel applications. It expects to acquire new time-saving punching equipment 4 years from now. If the company sets aside $125,000 each year, determine the amount available in 4 years at an earning rate of 10% per year.
Meggitt Systems, a company that specializes in extreme-high temperature accelerometers, is investigating whether it should update certain equipment now or wait and do it later. If the cost now is $280,000, what is the equivalent amount 2 years from now at an interest rate of 12% per year?
Loadstar Sensors is a company that makes load/ force sensors based on capacitive sensing technology. For a major plant expansion project, the company wants to have $30 million 5 years from now. If the company already has $15 million in an investment account for the expansion, how much more must the
Labco Scientific sells high-purity chemicals to universities, research laboratories, and pharmaceutical companies. The company wants to invest in new equipment that will reduce shipping costs by better matching the size of the completed products with the size of the shipping container. The new
Electric car maker Gentech signed a $75 million contract with Power Systems, Inc. to automate a major part of its assembly line system. If Power Systems will be paid 2 years from now, when the systems are ready, determine the present worth of the contract at 18% per year interest.
Thompson Mechanical Products is planning to set aside $150,000 now for possible replacement of large synchronous refiner motors when it becomes necessary. If the replacement isn’t needed for 5 years, how much will the company have in its investment set-aside account? Assume a rate of return of
How much could BTU Oil & Gas Fracking afford to spend on new equipment each year for the next 3 years if it expects a profit of $50 million 3 years from now? Assume the company’s MARR is 20% per year.
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