Question 5.HH: A new automotive “dry paint” separation process is environme...

Engineering Economy [EXP-20136]

A new automotive “dry paint” separation process is environmentally friendly and is expected to save $8.00 per car painted at a Detroit plant. The installed cost of the process is $8 million, and 250,000 cars are painted each year. What is the simple payback for the new technology?

The Blue Check Mark means that this solution has been answered and checked by an expert. This guarantees that the final answer is accurate.
Learn more on how we answer questions.

Annual savings will be 250,000 cars per year times $8 per car, which equals $2 million per year. The simple payback period is $8 million / $2 million per year = four years. This payback period is greater than the customary two to three years that the automotive industry likes to see.

Related Answered Questions

Given that the purchase price of a machine is $1,000 and its market value at EOY four is $300, complete the table below [values (a) through (f)], using an opportunity cost of 5% per year. Compute the equivalent uniform CR amount, using information from the completed table.

Verified Answer:

Year Investment at Beginning of Year Opportunity ...

In your own words, explain to your grandmother why the values of various government bonds go up when the interest rates in the U.S. economy drops.

Verified Answer:

Because the face value (what a bond is worth...

A small start-up biotech firm anticipates that it will have cash outflows of $200,000 per year at the end of the next 3 years. Then the firm expects a positive cash flow of $50,000 at the EOY 4 and positive cash flows of $250,000 at the EOY 5–9. Based on these estimates, would you invest money in

Verified Answer:

Find the IRR: 0 = −$200,000 (P/A,

\acute{i}...

The “Arctic Express” mutual fund company invests its monies in Russia. They claim that money invested with them will quadruple in value over the next 10 years. Suppose you decide to invest $200 per month for the next 10 years in this fund. If their claim is true, what effective annual rate of

Verified Answer:

Letting A = $200 per month, we solve for the unkno...

javier borrows $50,000 from a local bank at an APR of 9%, compounded monthly. His monthly payments amount to $50,000 (A/P, 0.75%, 60)=$1,040 for a 60-month loan. If Javier makes an extra payment on the first month of each year, his repayment duration for the loan will be reduced by how many months?

Verified Answer:

We can solve for N using trial and error. If we gu...

A remotely situated fuel cell has an installed cost of $2,000 and will reduce existing surveillance expenses by $350 per year for eight years. The border security agency’s MARR is 10% per year. a. What is the minimum salvage (market) value after eight years that makes the fuel cell worth

Verified Answer:

(a) Set AW(8%) = 0 and solve for S, the sa...

The International Parcel Service has installed a new radio frequency identification system to help reduce the number of packages that are incorrectly delivered. The capital investment in the system is $65,000, and the projected annual savings are tabled below. The system’s market value at the EOY

Verified Answer:

(a) FW(18%) = $84,028 ≥ 0, so the profitability ...

A plasma arc furnace has an internal combustion temperature of 7,000◦ Cand is being considered for the incineration of medical wastes at a local hospital. The initial investment is $300,000 and annual revenues are expected to be $175,000 over the six-year life of the furnace. Annual expenses will

Verified Answer:

(a) The sum of positive cash flows through year fi...

At a military base in Texas, Corporal Stan Moneymaker has been offered a wonderful savings plan. These are the salesperson’s words: “During your 48-month tour of duty, you will invest $200 per month for the first 45 months. We will make the 46th, 47th, and 48th payments of $200 each for you. When

Verified Answer:

$10,000 = $200 (F/A, i, 45) (F/P, i, 3) or i per m...

n July of 2018, Taylor purchased 2,000 shares of XYZ common stock for $75,000. He then sold 1,000 shares of XYZ in July of 2019 for $39 per share.The remaining 1,000 shares were finally sold for $50 per share in July 2020. a. Draw a cash-flow diagram of this situation. b. What was Taylor’s internal

Verified Answer:

(a) The following cash-flow diagram summarizes the...