Engineering Economy 15th. Edition by Sullivan, William G.; Wicks, Elin M.; Koelling, C. Patrick | 9780132554909 | 132554909 | Holooly

Engineering Economy [EXP-45247]

248 SOLVED PROBLEMS

Question: 6.8

Useful Lives ≠ Study Period: The Coterminated Assumption Suppose that Example 6-7 is modified such that an analysis period of six years is used (coterminated assumption) instead of 12 years, which was based on repeatability and the least common multiple of the useful lives. Perhaps the responsible

Verified Answer:

An assumption used for an investment alternative (...

Question: 5.T-Y-S.A

“The higher the MARR, the higher the price that a company should be willing to pay for equipment that reduces annual operating expenses.” Do you agree with this statement? Explain your answer. (5.2)

Verified Answer:

No.Ahigher MARR reduces the present worth of futur...

Question: 4.T-Y-S.Z

A bank offers a nominal interest rate (APR) of 6%, continuously compounded. What is the effective interest rate? (4.16)

Verified Answer:

i=e^{0.06}-1=0.0618

or

6.18 ...

Question: 6.T-Y-S.N

A certain U.S. government savings bond can be purchased for $7,500. This bond will be worth $10,000 when it matures in 5 years. As an alternative, a 60-month certificate of deposit (CD) can be purchased for $7,500 from a local bank, and the CD yields 6.25% per year. Which is the better investment i

Verified Answer:

Bond:

F W=\$ 10,000

with certainty ...

Question: 5.T-Y-S.D

A company has issued 10-year bonds, with a face value of $1,000,000, in $1,000 units. Interest at 8% is paid quarterly. If an investor desires to earn 12% nominal interest (compounded quarterly) on $10,000 worth of these bonds, what would the purchase price have to be? (5.3)

Verified Answer:

Desired yield per quarter

=12 \% / 4=3 \% ;...

Question: 2.T-Y-S.A

A company in the process industry produces a chemical compound that is sold to manufacturers for use in the production of certain plastic products. The plant that produces the compound employs approximately 300 people. Develop a list of six different cost elements that would be fixed and a similar

Verified Answer:

Fixed Cost Elements: Executive salaries and the r...

Question: 7.T-Y-S.E

A drug store is looking into the possibility of installing a “24/7” automated prescription refill system to increase its projected revenues by $20,000 per year over the next 5 years. Annual expenses to maintain the system are expected to be $5,000. The system will have no market value at the end of

Verified Answer:

EOY BTCF Depreciation Taxable Income Income Tax AT...

Question: 5.T-Y-S.F

A drug store is looking into the possibility of installing a 24/7-automated prescription refill system to increase its projected revenues by $20,000 per year over the next 5 years. Annual expenses to maintain the system are expected to be $5,000. The system will cost $50,000 and will have no market

Verified Answer:

\operatorname{AW}(20 \%)=-\$ 50,000(A / P, ...

Question: 2.T-Y-S.B

A farmer estimates that if he harvests his soybean crop now, he will obtain 1,000 bushels, which he can sell at $3.00 per bushel. However, he estimates that this crop will increase by an additional 1,200 bushels of soybeans for each week he delays harvesting, but the price will drop at a rate of 50

Verified Answer:

Let

X=

number of weeks to delay har...

Question: 4.T-Y-S.S

A geometric gradient has a positive cash flow of $1,000 at EOY zero (now), and it increases 5% per year for the following 5 years. Another geometric gradient has a positive value of $2,000 at the EOY 1, and it decreases 6% per year for years two through five. If the annual interest rate is 10%, whi

Verified Answer:

\begin{aligned}&P_{\mathrm{S} 1}=\$ 1,0...

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