please show your work on the math problems to get full credit.

i alrady have the answer in two of them i just need some explain how i get to the finl answer

TECH452 – Engineering Economics

Department of Engineering and Design

Eastern Washington University

Fall Quarter 2012

$
Homework 6 & Help Sheet (37.5 Points)
$

Assignment:

Complete the following numbered problems: 8.5, 9.1, and 9.9, from our textbook “Fundamentals of Engineering Economics”, using an Excel spreadsheet.
You must

show your work on the math problems to get full credit.

Formatting:

Text Size: All of the text in this assignment needs to be set in 10 or 12-point size. Please resist the temptation to mix and match point sizes. If you doubt your applications intentions, just select all of your text and insure that it is in 10 or 12-point size.

Margins: The right and left side can be set for ½” (0.5) margins. Set the top and bottom margins to one (1”). The only text that ends up on the outside of the one-inch margin is the page number.

Name Block: Place the name block in the
upper left
corner of the page. In MS Excel, use the left side cells. In this class the name block only needs to be on the first page. Put your
name first
, then the
class title
and then the
date
. Example:

Your Name

TECH 452 –Engineering Economics

November 26, 2012

Title: Skip one cell and place the title on the
left,
just below the name block. The title
for this
assignment is “Homework 6”.

Spelling/Grammar Checking: Remember to do your spelling and grammar checking before turning your assignments in. When doing the spelling/grammar checking keep in mind that some words such as mush and must, woods and words, or here and cow, will not be caught by either check. To correct these problems, you will need to proofread your work.

Page Numbers: Any homework that has more than one page needs to have page numbers on it. Please place your page numbers on the bottom of the page. In MS Excel, use the footer selection and place the page number
in
the
bottom

center
or
bottom right
of the page.

Content:

Problem Number: List each problem’s number on the left, placing a blank cell above it.

State or summarize the Problem: For this assignment, you may state the problem either exactly as it appears in the book or you may summarize the all the values, terms and percentages. This is to help insure that you use the correct values in your calculations.
If you chose to summarize, this will count as stating the given.
You will need to break long text up between cells so that you will stay with-in the printing boundaries of the page.

State the Given: Skip one cell and write the word “Given:” Follow that with what is known from the problem. If the problem has multiple parts, place the letter of each part before the “Given”. If the problem has a table, then reproduce the table.

Solve the Problem: Show your work in solving the problem

Saving/Naming Your File:

When you save your file make sure that your name and the project number are included in it.

Example:
YourName452HW6

Because of problems with Blackboard, use only letters and numbers in the file name.

Due Date: November 26, 2012

Revised 11/01/2012 JM
Page 1

2

>Sheet

1

Almalki

OV – 19 – 2

12

,000.The remaining $22,000 will be financed by the dwaler.The dealer computes your monthlypayment

N

0

)

1

2 $23,000 $32,000 ($18,000)

3

($25,000) ($18,000)

el.

PW(I)=-$25,000+$12,000(P/F,I,1)+$23,000(P/F,I,2)+$34,000(P/F,I,3)=0

N

0

1

2

3 x

Sami

TECH 452 Economics Engineering

N

0

Problem 7.4

Assume that you are going to buy a new car for $25,000.You will be able to make a down payment of

$

3

to be $547.47 for48 months of financing. What is the dealer’s annual rate of return on this car loan?

$22,000=$547.47(P/A,I,48)

i=0.75%

r=0.75*12=9%

i=(1+i)^-1

i=(1+0.0075)^12 – 1=9.38% per year

Problem 7.11

Consider four projects with the following sequences of cash flows

Net Cash Flow

Project A

ProjectB

ProjectC

ProjectD

($25,000)

(

$23,000

$43,233

($56,600)

$12,000

$32,000

($18,000)

($2,500)

($6,459)

$34,000

$88,345

a) Identify all the simple investments.

Simple investment: Project A,D project C Simple borrowing.

b) Identify all the nonsimple investments

Non- simple investment: Project B

c) Comare the i* for each project using E

x

Project A:

i^=59.32%

ProjectB:

PW(I)=$23,000+$32,000(P/A,I,2)- $25,000(P/F,I,3)=0

I^=82.72%

Project C:

PW(I)=$43,233-$18,000(P/A,I,3)=0

I^=12% A=borrowing rate of return

Project D:

PW(I)= – $56,500 – $2,500(P/F,I,1) – $6,459(P/F,I,2)+$88,345(P/F,I,3)=0

I^=11.37%

d) Which projet has no rate of return?

The answer could be project C on the grounds that its cash flowrepresent a loan not an investment.

Problem 7.20

Consider the following project’s cash flows:

net cash flow

($3,000)

$800

$900

Assume that the project’s IRR is 10%

(A) find the value of X

PW(I)=P/F,I,N)

PW(10%)= – $3,000+ $800(P/F,10%,1) + $9,000(P/F,10%,2)+ X (P/F,10%,3)=0

X= $2,035

(B) Is this porject acceptable at MARR=8%?

Since IRR=8%, the project is acceptable.

&A Page &P

Sheet2

Sheet3

2

>Sheet

1

Almalki

eering

2 Economics Eng

12

.25 per mile. Assuming a 40-year life for each road

00,000.

.

=Book value at beginning of year n – Salvage value,over, Remaining useful life at beginning of year n

n Dn

Dn Bn

0 $130,000 $130,000
1 $22,000

2 $22,000

3 $22,000

4 $22,000

$20,000

5 $22,000 $20,000 $0 $20,000

Sami

TECH-i

n

4

5

Vov 26, 2

0

Problem 8.5

Two different routes are under consideration for a new interstate highway:

Length of

Annual

Highway

First Cost

Upkeep Cost

The ” Long” route

22 miles

$21 million

$140,000

Transmountain shortcut

10 miles

$45 million

$165,000

For either route, the volume of traffic will be 400,000 cars per year. These cars

are assumed to operate at

$0

and an interest rate of 10%, determine which route should be selected.

User’s annual cost= 22miles*$0,25 per mile*400,000 cars=$2,200,000

Sponsor’s annual cost=$21,000,000(A/P,10%,40)+$140,000=$2,277,488

Short cut:

User’s annual cost= 10miles*$0,25*400,000 cars= $1,000,000

Sponsor’s annual cost=$45,000,000(A/P,10%,40)+$165,000=$4,766,674

Problem 9.1

Identify which of the following expenditures is considered as a capital expenditure that

must be capitalized (depreciated):

(a) Purchase land to build a warehouse at $

3

(b)Purchased a copy machine at $15,000.

( c) Installed a conveyor syatem at a cost of $55,000 to automate some part of production processes.

(d)Painted the office building, both interior and exerior, at a cost of

$22,000

(e)Repaved the parking lot at a cost of $25,000.

(f) Installed a purified water fountain in the employee lounge at a cost of $3,000.

(g) Purchased a spare part for a stamping machine at a cost of $3,800.

(h) Paid $12,000 to lease a dump truck for six months.

(i) Purchased a patent on an energy-saving device over five years at a cost of $30,000.

a,b,e,f, and h (amortization,rather than depreciation)

Problem 9.9

Consider the following data on an asset:

Cost of the asset, I

$130,000

Useful life, N

5 years

Salvage value, S

$20,000

Compute the depreciation allowance and the resulting book values using the following method:

Dn

SL

DDB

Bn

$108,000

$52,000

$78,000

$86,000

$31,200

$46,800

$64,000

$18,720

$28,080

$42,000

$693

(a) Depreciation rate=1/5 for SL

(b) Deprciation rate= 2/5 for DDB

1

Sheet2

Sheet3