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Showing posts with the label 2018

2018//5(a)//Engineering Eco//KU

You owe your best friend $2,000. Because you are short on cash, you offer to repay the loan over 12 months under the following condition. The first payment will be $100 at the end of month one. The second payment will be $100 + G at the end of month two. At the end of month three, you’ll repay $100 + 2G. This pattern of increasing G amounts will continue for all remaining months. i. What is the value of G if the interest rate is 0.5% per month? ii. What is the equivalent uniform monthly payment? iii. Repeat Part (i) when the first payment is $150 (i.e., determine G).

2018//4(b)//Engineering Eco//KU

Anew forklift truck will require an investment of $30,000 and is expected to have year end MVs and annual expenses as shown in the table below. If the before-tax MARR is 10% per year, how long should the asset be retained in service?

2018//4(a)//Engineering Eco//KU

Consider the following data on an asset: Compute the annual depreciation allowances and the resulting book values, using: i. the Straight Line (SL) method. ii. the 200% Diminishing Balance method with switchover to SL.

2018//3(b)//Engineering Eco//KU

Three mutually exclusive alternatives are being considered for the production equipment at a tissue paper factory. The estimated cash flows for each alternative are given here. (All cash flows are in 000 s.) Which equipment alternative, if any, should be selected? The firm’s MARR is 20% per year. Please state your assumptions.

2018//2(c)//Engineering Eco//KU

Three different bank loan rates for electric generation equipment are listed below. Determine the effective rate on the basis of the compounding period for each rate. i. 8.75% per year, compounded quarterly. ii. 9.25% per year, compounded monthly. iii. 8.5% per year, compounded weekly. Which bank would you recommend? Why?

2018//2(b)//Engineering Eco//KU

A large lithium-ion phosphate battery pack for an industrial application is expected to save $20,000 in annual energy expenses over its 6-year life. For a 3-year simple payback period, the permissible capital investment is $60,000. What is the internal rate of return on this $60,000 battery pack if it has a residual value of $10,000 at the end of 6 years? The MARR is 18% per year.

2018//2(a)//Engineering Eco//KU

A city is spending $20 million on a new sewage system. The expected life of the system is 40 years, and it will have no market value at the end of its life. Operating and maintenance expenses for the system are projected to average $0.6 million per year. If the city’s MARR is 8% per year, what is the capitalized worth of the system?

2018//1(b)//Engineering Eco//KU

A large wood products company is negotiating a contract to sell plywood overseas. The fixed cost that can be allocated to the production of plywood is $800,000 per month. The variable cost per thousand board feet is $155.50. The price charged will be determined by p = $600 - (0.05) D per 1,000 board feet. i. For this situation, determine the optimal monthly sales volume for this product and calculate the profit (or loss) at the optimal volume. ii. What is the domain of profitable demand during a month.