Engineering Economics 1, Your company tas asked ou to eslote 1 cleetstae coy stiches from ah emacs we mF afleine ren for 510 per onthe pec copy ofS eas en Fens asking forthe ited copy. acbineB rns for $300 per month ands otal mt par capy of 3 cents including labor ChTEES, “e) Find te and either machine nsepable) quantity of mowhy pis. {@) Wiis wachine would be preferable yo estimate 3000 copie er ont? +2, Wat would be the value in 6 year f $1000 compounds! ancually at 7% interest? #3, How much i $1000 for years fom naw worth to you at 6% steretcorspounde anaually? 4, you mabe 5 ed of yar Gepost of $100 enc oan aunusllycompoonded accounts 6% incest thom much vil 900 Bave at the end of the Sth yar? #5, Hlow much are 7 end of year payments of $1000 eack worth 4 Yoo now with enneal compounding at BS Soterest? 4, afyou terow $10,000 and rosy In’ ea of year eu payments with annus! Gompooning at * 6% fntret ow much wil the payments be? 1, How much would you have to dept atthe en of each year for 6 yours to accumulate $1000 for ‘auiprment overhaul? Compound ix annual at 0% interest. {6 You nave the opportunity to pachast a $10,000 sewes bond fom te ity of New Horizon whic ye na str araly cn the foc Value ofthe bond the bondi redeemable t fe vali ee: Fide msimam reps we yf The bord ssouming your ssaney value at 10% 5, Find the social and effective annvel interest rates for © rod system that charges LIAR per sonth for ie money Use. “10. ‘Acspall mannfactring process safer ort of 510,000. lif of 10 yon, and. $10.00 alge Assmall mamaiacatied Pear are 850009 aod the sanual disburtzments are S20,000, At 2 20% cost af money find () the present equivalent, (@) the annual egpivalent, 11, Alana gpecaltr tate tat he usa propery fora profit of $0000, Each yar fens p Aan eet tal ecoee of 3400 and pad propery sanz of $100. He hs Compt it ea pte to be eat 10% on he fvestent be made 20 years 9, "What war the original fnvestment 187SF j 185 Eroheems Esoanies 1 muri! tx exempt cect wily is fae wit the flloving samuel Frequency of power ‘uate and cvs characerists fora poriewas industriel sank ietene Protabity of This Nambe: Cortef This Number of Ou Ve 85 10:the Utlty Company so 3 1,000 PO) = 25PU) = 2.702) = 1, PO) = Ha) 0 Sareea tapes wi havea Hof 26 year wine sage valueand anal tenance Sear pee tsi: amoust of ncney te wt could teed open backup ‘mem at 210% inte rate i P pe ont roves oatebld efse tthe acl "16 Regal oben #10 witb isome tx eects. Find ihe peng eqs at 20% interest and tr rate of 40% fore (4) Straight lin deprecation. (8) Som of yer ists (6) Doobie rate deining balance. Formas Cipe= (1 ay O= TF ywLENGR 41 Eagiaeriag Bemomics ‘Review Questions for Test Colette et Preset Worth (PH fr echo the loan ech lms Cals or 3 years with a 1S36cot ofmaney. Include cath flow dagen foreach problem ‘Ac You expt nally coms $2000, and you wit eccvng income tom ped repos ence 3 portoaling $597, 1B. Your computer nally costs $2000, nd you wi fe eccvng a Ino fom typed pits coce ‘rf 325 and increasing by 100 ai he yea (©. Your computer inily cons $2000, nd yo wile eceving an income fom pe eps Sear ig ee! She se os 27 ea ey ‘Stoo ee and 3 yea ‘Your omnis coe $200, ad ou wl be cing an nce a pet rep a the df 2" yen he et of 3100, $144 for he year, an S100 forthe [E, aed onthe lowing dicusioa, nich eshfow as be rene Nat Present Work?A dan var constructed for $200,000, --The anqudl eélntenance cost is §5000. accent te Ou Bu, Whe capltsilord cont of tie dees techeala enuseessoe satises cart = pagnscon + #55. cores co igen + SEE x00 ‘sem botler 3 purchased on the tasisvo# guaracteed perforcnice, A test Andicates that the operacing cost vill be $300 were per year than the wamufactorer Tf the expecced Lite af the boiler 45 20 yetrs and woney is versh gutranced. 4, ov ouch should the purchaser deduce fron the purchase price to conpeasaze for the extra eperating cone? FACPIA, 12, H) = 300 CR/A, BE, 20) * 500 (9.181) = 62,565.43 ‘th ots bose 2 soll garden tractor. There will be no maincensnce core the Sirs: year es the eractor ir seid vith ove year's free csintenance. ‘The second year the eatacenance is estinsced at $20, Insubsaquens yesrs the tainsennce cote SUL nceesse 20 per year ({oe., Sed year cutatenanee = $40; 4th yest maiacenasct = 300, ere.), Row much would weed £0 be x0 aside now at 5% tnterest to pey tbe ailncenaoce ensre on the tractor for the first ix yeare of cunerssip? P= $20(7/F 52,2) ++ 40(P/F,5E,3) + $69(P/F,5T,4)-+880(P/F, 52, $)*5100(0/2,,52,6) = 20(0. 500)" 400, 8636) + 60(0,8227) + 89(0.7635) + 100(6.2462) edad 7 GS 4 aga + bGe Pee = 535.35 a ‘Deing Gradient Ta ceric, 5,8 = $20(11.565) = $298.35 > Wiotors fron tue efferent manufzerurers are belong considered for a: appiicacion. Both morors are SOK?, 469 volts, 3 phase, 60 eycie, but Motor A operates st 802 ‘efficiency vhereas Nozor B operates at 48% efFictency, The expected need fer eters de 15 yours. Mater 4 eoste $600 at Hapor b corte €750. Electeical goergy corte 2.0 cence/evh. acd the mot0Ts vill be operated 8 hours per days 250 days per year. Assume Eaves at 32. Which eoter should be purchased? Wa? ‘Assumptions, eee elo tere rereeet Assume money at 62 per yea? = 150 x 0102 golters » g1965,00 vi a eteieee at Ge sc ody pre $00 Taya letear wala th een cps aa Hse ca eo $509 doen pe ‘MotB teri te mnt eens hoe os a EEworer a ae a HL Lit tees EWE solders o 51704, 51 ~ Helle tte demas Beg, 6a ‘Meter Ar t exrteed nécove Thay PEPOLEs 62.35) = 360000. 1030) = ¢ Tees = 5600(0.03) 7 7 Anpudt Pover cose seo, cost g fSE-00 over Feten SOSSTETEGS #73004/2.6%,15) = $750(0.1030) Taxes = 5750(0.03) i Annual Pover core lyete to Hach sichine ts cs Assume thenlatnes atet, perforating active sate of Pn cite ener «sna set sens Be hoa ear 2a — “Capicad Recovery = ($10,000-3,000), (Al? 62,22) 4 = Gases cams Chen anes ee fon seine Bs : a Said Select Machioe Y (seller asnuat cost)te butldiog # highway, 4 highway comission {5 feced with the alcezaacives of suiting a74-tag suderpae shee eld ake care of all fare neat o bel idig 2Zelnne underpass nov snd # second Z-lane undespass 10 yeare lacer. she 4-1 underpass vould cort $40,000 acd have 4 esincensnce cost Of $1,000 for year during the £0 yenre Se 46 underpass will be needed. The 2-Lane underpass Hit cost $27,000 Dh would have ® maincenasce cost of $000 per Je TE fibencing cosce are 62, which alterastive should be adopted? Aram sere Enlvage valve for each alternative ar the ené of 40 years fetanes First cose PH. Haine. * $10P0(P/A,€%,40) = 1000(15.05) ‘TOTAL PAW. COST ig i ve 2tane: re cons of 3st a PATS att Seite sagpe nen, : (ee FREED clog ice Ibs Tin dauats oP Rice a0 emeeay 2 ee Bien Bae ease? Single G-ene underpass 1s wore « svarastics seen ~ is the average end fs found by aéding the values of the observations ang then dividing by tho muster of cbjects cbserved. “Vode - is the typice! value and 1s the ftem that occurs most frequently *Wedien ~ is the micdle value and 1s 2 vsiue which has an eque) number of observations greater than end an equal nunber less than tne value ‘shange - 1s the difference between the Targest and snalTest observation ‘The mean, mode, and median are neasures of central tendency. ‘The Range, Standard Deviation, and Variance are noasures of dispersion about their'nean’ (spread of observations). _[ENGINEERING ECONOMY F $10,000 invested at 5% per year cc: 1. About how Yong wit] #8 araually to eauble in value? 2) 5 years i 10 years eh 1s years § ase 8) 25 years 2, 14 $200 ts eapost 19S account at the beginning of each of 15, years and the account draws Interest at 7 ber year corgsunded enrullly, The value of the account a2 the end of 15 years will de most nearly: a) $5,909 B) s5.409 gh som 55,300 a) $7,200 ~ 3. How sony months af an interest rete of 1 percent per earth does roney have f'be tavarted before will double in value? ad 8) 59 nants 8) 62 monehe ¢) 79 months a @) 26 mantns 8) 65 months 4. A departnant store charges one and ene-half percent interest per month en credit purchases, This is equivalent toa nominal annval interest rate of 2) 1-5 percent B} 1320 per fe) 18.0 percent 4) 19.6 percent fe) 21.0 percent A berk cays one cercent Interest on savings acesunts four tices & ‘The effective anneal interest rete 1s a} 1.09 percent 1b) 160 bereent ¢) 3.58 percent 4) 4°00 Fercent e) 4.05 percentWe. a 1. 1B. A sur of $1,000 4s barroved for one year at an interest rate of 1% per Fee eT een lee money 1s Borrowed for the sare paried at sn interes Tar of 2s per annem, the Saving in Snterest charges wcutd bs Which of the following is NOT a wethod of deprectating plant equizcent fe ecounting and engineering economic analysis purposes? a) double entry method 2b} Fixed. percentage rethod fc} Sumeofuvear-digits nathoe 4} Strateht, line aethod fe) Sinking fund method nat present sum wogld be neaéed te provide for annual end-of-year payner GF S15 each forevar? Assume interest 16, LBB b) siso-00 fe) $209.27 Q 5 ‘Adam ves constructed for $200,000. Te annus) einterance cost is $5.06 Te interest ig at 5 percent, the capitalized cost of the gan, Including maintenance, 151 a} $200,000 &) sga0.o00 fe} §215.000 & Hse.e00 e) $300,000 Given a sun of aoney @ that will be received six yetrs fron cow. At S Fareont compound ancerest the present worth nov of. {5 $60.90." At ch Glo interest rate, what would be the value ef ten years fran now? a) § 60.00 b) $76.58 fe) § 90.00, e 497.73 $2000depREcCIATION we THODS teres Le veetul L1fe of scructore in years 7 original core $2 kaneel cost of deprectattor Gye velue at the eod of A years Che Valen at end of Uife scroctare (vatvage value) 's beprectation through year A Stralghe-tine Method arey a7 ee gre Me T manele selvagt value at ood of steth gear, ‘Gna seractuce that s0et S120 fad of 10 years peterctne the yearly cost of deprectacion, dha covel depreciation up 0 end of sixth year wa nas ep escigsted scrap value of 520 £120-820 « sro/yr a £(512002 » ve granefCS}20220) « 60 HIROSE guorge, og + SELEPSAD. = 80. cg = SHARE =H Hinged Peceencage Method 1 cost of deprectation ds a fixed percentage of the saivere valve at the ‘ee enn Elgianing of the years Dore got consider serap value ate where k= depreciation coostent aye Dk erent es cant Examole peeeraine the depreciat{on charge for che siath year and che salvage aloe eee eee sath yest for # atructure char coat S120 voen new 4nd bes ee em OTEE Of 10 yours. Scrap value at the end of teskite te 920 ard ie oes. ey = s120(s = 0,161) = 120004085) = £49.02 ag = (G49002){k) = (49.02) (164) = 85.04 tg © siz - 0.1678 = $60.984 dun vss constructed for $200,000, ~The anousl matotesance cost is $5000. If ‘puoreat 4: a1 32, the capitalised coat of the dan, Lasiudag sstacenasce t capitalised cos * $200,000 + £5902 = 300,000 #4 seem boiler 18 purenased on the basis of eutranterd pertormsiee, A tert fhateaeer that che peracdag cost nil be $00 nore per year than the memufacturer furactsed. 3E the expected Life of the boiler is 20 years and sooy {+ worth Eii'toe such shouted ene purchaser deduct from che purchase prict to tongensite for the extee operating core? P= ACMA, £2, M) = 300 (2A, BT, 20) = 300 (9.818 = $2,545.49 sh ote buys 2 acall garden eraztor, There will be fo saiseesance co years the cractor fa sold vith soe year's free maintenance. The Zhe peintenaoce is getinaced at $20. Inebsequent years the mai SPir"incresse 420 per year (Lees, Je¢ year mnineensace = $40; 4th yeer oalntecaace weion ete), How much would oaed to be sez aside cow at 52 Ancerest to 98y fur eitatenance cones en che craetor fer the fire: six years of owership? 820(P/F 52,2) + S40(R/F 37,3) + $60(P/F 52,6) 4990(F/7, 52,5) 4510002) > 1 pora,30%0) 4 40(@.6656) + 40(0-8227) + 80(0.7835) + 10046, 7682) Tied + BSS + 4338 + ONE + 14.8 = 5238.35 % Ustog Gradieot Tabte P= sG, 546) + s20 (21.958) = $239.35 svocors from tuo different mroutaccorers are bets Dock goers re SOMP, 460 valte, 3 pbase, €0 cycle, but wotor A operates at 802 tfficiecry whereas Motor 3 operster at G62 ef€icleacy. The expected meed for Serars is 15 yeare. Moter A costs $600 ané Mocor B costs $750. Electrical Ziitgy Cones 2-0 ccoce/kvh. aoe the moror will be operated & bours per day, Bo diye per year. Astume taxes at 31, Mich actor should be purchased? WAT Assume tone 1 nortepover = 0.746 kitovatte Aevupe woney at 6E per yeur Asnus1 Power consunet note om x Du7h6me zB hen. 250 étyt x 0.02 dolore = 1065.00 i in a‘enn butldiog a nighony, = bighuay comission machine A would bs lower cost 2) Fegt,601.00 3) P=5792.10 44) F=8563.70 8) Pe$5206.00 6) A=$2,374.00 7) A-8129.61 8) P=85733.00 9} Kfpominal}=18% _Wemtective)=18.56% 10) & PeS77,375.00 bi A=$6,53.20 1) pog4,745.98 42) Expedted outage cost of oid systom=$2,200 Expected outage coet with proposed backup system=$400 ‘Equate annual cast of old with new, expenciture <= 12,770.30 13) 0=3436 tonsiyaer 14) a: P=-$7,607.00 b; P=-S3.e26.90 P=-$3,234.40 Engr 401: Engineering Economics Review Questions for Test 1; Problems A-K 8) NBWs 81.14 8) NPW= $2.10 ©) NPW=-$218 19 D) NPW= $254.08 ©) cash fowD. F) nominal=18% G) P=$53,609 Hy effecive=t6.075% 1) When there is annuat compounding 3) nominal=240% 6) reominal=2080% Engingaring Economy Questions 41-50 S88 746) an 8 48) 49) D 50) A Engineering Economy, Probiems 1-19 ne 2B ac ae oe ja 7B a8 9) EB wc ame A 1A 19D Ee 18D me 4A 1910 Grossover Chart (Break-even Chart) 105 +21N=111-+4.1N 3 N= 99.95~ 100 places