Engineering Economy

Assignment 1 1. The cost of operating a large ship Co varies as the square of its velocity: a. Co = knv2 Where n is the trip length (No./ of miles travelled, and k is a constant of proportionality) It is known that when v = 12 miles/hr, Co = $100/mile. The cargo it is carrying is fresh fruit and the value depreciates at it loses freshness at $1500/hr. At what speed must the ship travel in order to minimize the total cost. 2. A car rental company purchases a car for Rs.800,000. The company expects to earn Rs.120,000 for the first year. The earning is expected to drop by a uniform amount of Rs.4000 each subsequent year. The life of the car is 15 years and its salvage worth after 15 years is not considered. The company maintains an account with its bank that pays an interest rate of 9%. a. Based on the data given, draw a cash flow diagram for the investment. b. Determine if this investment is sound?