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    Engineering Economics Assignment BETE 54D Present Worth

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    Abdullah Qureshi
    The document contains 3 engineering economics assignment questions: 1) Compares the present worth of two machine alternatives (A and B) over 6 years with different initial, operating, salvage costs and a discount rate of 13%. 2) Compares the present worth of two water storage installation options (building a tank on a tower vs. on a hill) over 40 years with different installation, operating, salvage costs and a discount rate of 12%. 3) Compares the present worth of two 24-month lease plans (standard monthly payments vs. single upfront payment) for a car with different down payments, deposits and a discount rate of 6% compounded monthly.

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    Engineering Economics Assignment BETE 54D Present Worth

    Uploaded by

    Abdullah Qureshi
    52 views1 page
    The document contains 3 engineering economics assignment questions: 1) Compares the present worth of two machine alternatives (A and B) over 6 years with different initial, operating, salvage costs and a discount rate of 13%. 2) Compares the present worth of two water storage installation options (building a tank on a tower vs. on a hill) over 40 years with different installation, operating, salvage costs and a discount rate of 12%. 3) Compares the present worth of two 24-month lease plans (standard monthly payments vs. single upfront payment) for a car with different down payments, deposits and a discount rate of 6% compounded monthly.

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    The document contains 3 engineering economics assignment questions: 1) Compares the present worth of two machine alternatives (A and B) over 6 years with different initial, operating, salvage costs and a discount rate of 13%. 2) Compares the present worth of two water storage installation options (building a tank on a tower vs. on a hill) over 40 years with different installation, operating, salvage costs and a discount rate of 12%. 3) Compares the present worth of two 24-month lease plans (standard monthly payments vs. single upfront payment) for a car with different down payments, deposits and a discount rate of 6% compounded monthly.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    52 views1 page

    Engineering Economics Assignment BETE 54D Present Worth

    Uploaded by

    Abdullah Qureshi
    The document contains 3 engineering economics assignment questions: 1) Compares the present worth of two machine alternatives (A and B) over 6 years with different initial, operating, salvage costs and a discount rate of 13%. 2) Compares the present worth of two water storage installation options (building a tank on a tower vs. on a hill) over 40 years with different installation, operating, salvage costs and a discount rate of 12%. 3) Compares the present worth of two 24-month lease plans (standard monthly payments vs. single upfront payment) for a car with different down payments, deposits and a discount rate of 6% compounded monthly.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Engineering Economics Assignment BETE 54D

    Attempt the following question

    Q.1 Two alternative machines are being considered for a manufacturing process. Machine A has an
    initial cost of $75,200, and its estimated salvage value at the end of its six years of service life is
    $21,000. The operating costs of this machine are estimated to be $6,800 per year. Extra income
    taxes are estimated at $2,400 per year. Machine B has an initial cost of $44,000, and its salvage
    value at the end of its six years of service life is estimated to be negligible. Its annual operating costs
    will be $11,500. Compare these two alternatives by the present-worth method at i = 13%.

    Q2. A large refinery and petrochemical complex is planning to manufacture caustic soda, which will
    use 10,000 gallons of feed water per day. Two types offered-water storage installation are being
    considered to serve over 40 years of useful life: Ill Option 1: Build a 20,000-gallon tank on a tower.
    The cost of installing the tank and tower is estimated to be $164,000. The salvage value is estimated
    to be negligible. II Option 2: Place a 20,000-gallon tank of equal capacity on a hill that is 150 yards
    away from the refinery. The cost of installing the tank on the hill, including the extra length of
    service lines, is estimated to be $120,000 with negligible salvage value. Because of its hill location, an
    additional investment of $12,000 in pumping equipment is required. The pumping equipment is
    expected to have a service life of 20 years with a salvage value of $1,000 at the end of that time. The
    annual operating and maintenance cost (including any income-tax effects) for the pumping
    operation is estimated at $1,000. If the firm's MARR is known to be 12%, which option is better,
    calculated on the basis of the present-worth criterion? At an interest rate of 12%, compare the net
    present worth of each option over eight years. 5

    Q3. A local car dealer is advertising a standard 24-month lease of $1,150 per month for its new XT
    3000 series sports car. The standard lease requires a down payment of $4,500 plus a $1,000
    refundable initial deposit now. The first lease payment is due at the end of month 1. Alternatively,
    the dealer offers a 24-month lease plan that has a single up-front payment of $30,500 plus a
    refundable initial deposit of $1,000. Under both options, the initial deposit will be refunded at the
    end of month 24. Assume an interest rate of 6% compounded monthly. With the present-worth
    criterion, which option is preferred?

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