EGN3613 Module 7 Calculation Example

Опубликовано: 13 Май 2024
на канале: Dr. Ron Eaglin's Web and Database Programming
7

Engineering Economics Calculations
Capitalized equivalents, inflation adjustments, selection of alternatives

Problems Solved:
Q1. Volusia County has two alternatives for traffic light in an excluded area. Alternative A is to install an electrical powered traffic light, while alternative B is to install solar powered traffic light. The initial cost, the annual operation cost are provided in the following table. With MARR 10% and over a period of 5 years, which alternative should be selected?

Estimate Electrical Powered Solar powered
Initial Cost $2,500 $6,000
Annual Operating Cost $900 $50
Number of Periods 5 5

Q2. Alternative A has a first cost of $20,000, an operating cost of $9,000 per year, and a $5,000 salvage value after 5 years. Alternative B will cost $35,000 with an operating cost of $4,000 per year and a salvage value of $7,000 after 5 years. At an MARR of 12% per year, which should be selected?

Q3. What is the capitalized equivalent cost of a dam that will cost $25 million now and will require $2 million in maintenance annually? The effective annual rate is 12%.

Q4. How many dollars would be required today to purchase an item that increased in cost by exactly the inflation rate if the cost 30 years ago was $1000 and inflation was 4% per year?

Q5. A certain machine will have a cost of $25,000 (then $) six years from now. Find the PW of the machine if the real interest rate is 10% per year and the inflation rate is 5% per year using (a) constant-value dollars, and (b) then-current dollars.


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