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Ch2_TutorialProblems

The document contains a series of engineering economy questions involving financial calculations related to investments, costs, and revenues over time. It includes scenarios such as determining future worth of investments, effective total costs of a flying car, annual savings required for equipment investments, cash flow analysis for a university's licensing program, and present worth calculations for bridge refurbishment funds. Additionally, it addresses maintenance costs for a power plant modification and the calculation of an A/P factor for a specified interest rate and duration.

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ابراهيم حسن
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© © All Rights Reserved
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3 views

Ch2_TutorialProblems

The document contains a series of engineering economy questions involving financial calculations related to investments, costs, and revenues over time. It includes scenarios such as determining future worth of investments, effective total costs of a flying car, annual savings required for equipment investments, cash flow analysis for a university's licensing program, and present worth calculations for bridge refurbishment funds. Additionally, it addresses maintenance costs for a power plant modification and the calculation of an A/P factor for a specified interest rate and duration.

Uploaded by

ابراهيم حسن
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Engineering Economy

Question (1)

The president of Ford Motor Company wants to know the equivalent future worth of a $1 million
capital investment each year for 8 years, starting 1 year from now. Ford capital earns at a rate of
14% per year

Question (2)
The Moller Skycar M400 is a flying car known as a personal air vehicle (PAV) that is expected to
be FAA- certified by December 31, 2011. The cost is $985,000, and a $100,000 deposit will hold
one of the first 100 “cars.” Assume a buyer pays the $885,000 balance 3 years after making the
$100,000 deposit. At an interest rate of 10% per year, what is the effective total cost of the PAV
in year 3?

Question (3)
A company that sells high-purity laboratory chemicals is considering investing in new equipment
that will reduce cardboard costs by better matching the size of the products to be shipped to the
size of the shipping container. If the new equipment will cost $220,000 to purchase and install,
how much must the company save each year for 3 years in order to justify the investment, if the
interest rate is 10% per year?

Question (4)
A local university has initiated a logo-licensing program with the clothier Holister, Inc. Estimated
fees (revenues) are $80,000 for the first year with uniform increases to a total of $200,000 by the
end of year 9. Determine the gradient and construct a cash flow diagram that identifies the base
amount and the gradient series.

Question (5)
Neighboring parishes in Louisiana have agreed to pool road tax resources already desig- nated for
bridge refurbishment. At a recent meeting, the engineers estimated that a total of $500,000 will be
deposited at the end of next year into an account for the repair of old and safety-questionable
bridges throughout the area. Further, they estimate that the deposits will increase by $100,000 per
year for only 9 years thereafter, then cease. Determine the equivalent (a) present worth and (b)
annual series amounts, if public funds earn at a rate of 5% per year.

Question (6)
Question (7)

A coal-fired power plant has upgraded an emission control valve. The modification costs only
$8000 and is expected to last 6 years with a $200 salvage value. The maintenance cost is expected
to be high at $1700 the first year, increasing by 11% per year thereafter. Determine the equivalent
present worth of the modification and maintenance cost at 8% per year.

Question (8)

Determine the value of A/P factor for an interest rate of 7.3% and n of 10 yrs that is (A/P, 7.3%,
10)

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