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Engineering Economics Analysis 9th Edition Ted G. Feller - Solutions

Big City Carl, a local politician, is advancing a project for the construction of a new dock and pier system at the river to attract new commerce to the city. A committee appointed by the mayor (an opponent of Carl's) has developed the following estimates for the effects of the project.Cost to
Two different routes, which entail driving across a mountainous section, are being considered for a highway construction project. The first route (the high road) will require building several bridges and navigates around the highest mountain points, thus requiring more roadway the second
The federal government proposes to construct a multipurpose water project to provide water for irrigation and municipal use. In addition, flood control and recreation benefits will be realized. The estimated benefits of the project computed for 10 year periods for the next 50 years are given in
The city engineer has prepared two plans for the construction and maintenance of roads in the city park. Both plans are designed to provide the anticipated road and road maintenance requirements for the next 40 years. The minimum attractive rate of return used by the city is 7%. Plan A is a
The state is considering eliminating a railroad grade crossing by building an overpass. The new Structure, together with the needed land, would cost $1.8 million. The analysis period is assumed to be 30 years based on the projection that either the railroad or the highway above it will be relocated
An existing two-lane highway between two cities, 10 miles apart, is to be converted to a four-lane divided freeway. The average daily traffic (ADT) on the new freeway is forecast to average 20,000 vehicles per day over the next 20 years. Trucks represent 5% of the total traffic. Annual maintenance
The local highway department is preparing an economic analysis to see whether reconstruction of the pavement on a mountain road is justified. The number of vehicles traveling on the road increases each year, hence the benefits to the motoring public of the pavement reconstruction also increase,
A section of road in the state highway system needs repair at a cost of $150,000. At present, the volume of traffic on the road is so low that few motorists would benefit from the work. However, future traffic is expected to increase, with resulting increased motorist benefits. The repair work will
A 50-meter tunnel must be constructed as part of a new aqueduct system for a city. Two alternatives are being considered. One is to build a full-capacity tunnel now for $500,000. The other alternative is to build a half-capacity tunnel now for $300,000 a na then to build a second parallel
The Fishery and Wildlife Agency of Ireland is considering four mutually exclusive design alternatives (Table P16-24) for a major salmon hatchery. This agency of the Irish government uses the following B/C ratio for decision making: BIC ratio = EW(Net benefits)/ EW(Capital recovery cost) + EW(O&M
Six mutually exclusive investments have been identified for evaluation by means of the benefit-cost ratio method. Assume a MARR of 10%, an equal project life of 25 years for all alternatives, and the data in Table P16-25.(a) Use annual worth and the B/C ratio to identify the better alternative.(b)
Answer the following questions.(a) Use the conventional B/C ratio to evaluate the alternatives and make a recommendation.(b) Use the modified B/C ratio to evaluate the alternatives and make a recommendation.(c) Use a present worth analysis to evaluate the alternatives and make a recommendation.(d)
Each of the following 10 independent projects has a 10 years life and no salvage value.The projects have been proposed by the staff of the Ace Card Company. The MARR of Ace has been 12% for several years.(a) If there is ample money available, what projects should Ace approve?(b) Rank orders all the
At Miami Products, four project proposals (three with mutually exclusive alternatives) are being considered. All the alternatives have a 10-year useful life and no salvage value.(a) Use rate of return methods to determine which set of projects should be undertaken if the MARR is 10%.(b) Use rate of
AI Dale is planning his Christmas shopping for seven people. To quantify how much his various relatives would enjoy receiving items from a list of prospective gifts AI has assigned appropriateness units (called "ohs") for each gift if given to each of the seven people. A rating of 5 ohs represents
The following facts are to be used in solving Problems 17-4 through 17.7 in assembling data for the Peabody Company annual capital budget five independent projects are being considered. Detailed examination by the staff has resulted in the identification of three to six mutually exclusive do
For an unlimited supply of money, and replacement Assumption 1, which project alternatives should Peabody select? Solve the problem by present worth methods. (Answer: Alternatives 1B, 2A, 3F, 4A, and 5A)For an unlimited supply of money, and replacementAssumption2, which project alternatives should
For an unlimited supply of money, and replacementAssumption2, which project alternatives should Peabody select? Solve the problem by rate of return methods. (Hint: By careful inspection of the alternatives, you should be able to reject about half) if them. Even then the problem requires lengthy
A1. Sell the land for $500,000. ·A2. Lease the property for a car-washing business. An annual income, after all costs (property taxes, etc.) of $98,700 would be received at the end of each year for 20 years. At the end of the 20 years, it is believed that the property could be sold for $750,000.
The property (building and land) probably can be sold for $3 million at the end of 20 years. Project B: An insurance company is seeking to borrow money for 90 days at 13 3/4%per annum, compounded continuously. Project C: A financier owns a manufacturing company. The firm desires additional working
The Raleigh Soap Company has been offered a 5-year contract to manufacture and package a leading brand of soap for Taker Bros. It is understood that the contract will not be extended past the 5 years because Taker Bros. plans to build its own plant nearby. The contract calls for 10,000 metric tons
The contract offered by Taker Bros. is a favorable one, which Raleigh Soap plans to accept. Raleigh management has set a 15% before-tax minimum attractive rate of return as the criterion for any of the projects. Which projects should be undertaken? Ten capital spending proposals have been made to
Mike Moore's microbrewery is considering production of a new ale called Mike's Honey Harvest Brew. To produce this new offering he is considering two independent projects. Each of these projects has two mutually exclusive alternatives and each alternative has a useful life of 10 years and no
Why is it important for engineers and managers to understand accounting principles? Name a few ways that they can do so?
Explain the accounting function within a firm. What does this function do, and why is it important? What types of data does it provide?
Develop short definitions for the following terms: balance sheet, income statement, and fundamental accounting equation.
Explain the difference between short-term and long term liabilities.
List the two primary general accounting statements. What is each used for and how do they differ? Which cost important?
What is the advantage of comparing financial statements across periods or against industry benchmarks rather than in looking at statements associated with a single date or period?
If a firm has a current ratio less than 2.0 and an acid-test ratio less than 1.0, will the company eventually go bankrupt and out of business? Explain your answer.
Calculate the equity of the Gravel Construction Company if it has $1 million worth of assets? Gravel has $127,000 in current liabilities and $210,000in long term liabilities.
Scar Mack’s Paint Company has annual sales of $500,000 per year. If there is a profit of $1000 per day, 6 days per week operation, what is the total yearly business expense? All calculations are on a before-tax bass.
Mama L's Baby Monitor Company has current assets of $5 million and current liabilities of $2 million. Give the company's working capital and current ratio.
From the following data, taken from the balance sheet of Petey's Widget Factory, determine the working capital, current ratio, and acid-test ratio.
The general ledger of the Fly-Buy-Nite (FBN) Engineering Company contained the following account balances (partial listing) at the end of June, 2004. Construct an income statement. What is the net income before taxes and the net profit (or loss) after taxes? FBN has a tax rate of 27%.
For Gee-Whiz Devices calculate the following: working capital, current ratio, and acid-test ratio.Gee-Whiz Devices Balance Sheet DataCash
For Evergreen Environmental Engineering (EEE), determine the working capital, current ratio, and acidtest ratio. Evaluate the company's economic situation with respect to its ability to payoff debt. EEE Balance Sheet Data (thousands)Cash
For Magdalen Industries, compute the net income before taxes and net profit (or loss). Taxes for the year were $1 million. Calculate the interest coverage and net profit ratio. Is the interest coverage acceptable? Explain why or why not.
Turbo Start (Problem 18-17) has current assets totaling $1.5 million (this includes $500,000 in current inventory) and current liabilities totaling $50,000. Find the current ratio and acid-test ratio. Are the ratios at desirable levels? Explain.
For J&W Graphics Supply, compute the current ratio. Is this a financially healthy company? Explain.J&W Graphics SupplyBalance Sheet Data (thousands)Assets Cash
For Sutton Manufacturing, determine the current ratio and the acid-test ratio. Are these values acceptable? Why or why not?Sutton Manufacturing Balance Sheet Data (Thousands)Assets
For Andrew's Electronic Instruments, calculate the interest coverage and net profit ratio. Is Andrew's business healthy?Income Statement for Andrew's Electronics for End of Year2004 (thousands)RevenuesOperating revenuesSales
LeGaroutte Industries makes industrial pipe manufacturing equipment. Use direct-labor hours as the burden vehicle, and compute the total cost per unit for each model given in the table. Total manufacturing indirect costs are $15,892,000, and there are 100,000 units manufactured per year for Model
Par Golf Equipment Company produces two types of golf bag: the standard and deluxe models. The total indirect cost to be allocated to the two bags is $35,000. Determine the net revenue that Par Golf can expect from the sale of each bag.(a) Use direct-labor cost to allocate indirect costs.(b) Use
RLW-II Enterprises estimated that indirect manufacturing costs for the year would be $60 million and that 12,000 machine-hours would be used.(a) Compute the predetermined indirect cost application rate using machine hours as the burden vehicle.(b) Determine the total cost of production for a
Categorize each of the following costs as direct or indirect. Assume that a traditional costing system is in place.
Machine run costs Cost to market the productMachine depreciation
Solve diagrams (a)-(c) for the unknowns R, S, and T, assuming a 10% interest rate.
For diagrams (a)-(d), compute the unknown values: B, C, V, x, respectively, using the minimum number of compound interest factors.
For diagrams (a)-(d), compute the unknown values C, A, F, A, respectively.
For diagrams (a)-(d), compute the unknown values W, X, Y, Z, respectively.
Compute the value of P in the diagram.
Use a 10% interest rate to compute the value of X in the diagram.
Use a 15% interest rate to compute the value of P in the diagram.
If i = 12%, what is the value of B in the diagram?
Compute the value of n for the diagram, assuming a 10% interest rate.
What is the value of n, for this diagram, based on a 31/2% interest rate?
Compute the value of J for the diagram, assuming a 10% interest rat
Compute the value of C for the diagram, assuming a 10% interest rate.
If i = 12%, compute G in the diagram.
Compute the value of D in the diagram.
Compute E for the diagram.
Using a 10% interest rate, compute B in the diagram.
Find the value of P for the following cash flow diagram.
The following cash flow transactions are said to be equivalent in terms of economic desirability at an interest rate of 12% compounded annually. Determine the unknown value A.
Upon the birth of his first child, Dick Jones decided to establish a savings account to partly pay for his son's education. He plans to deposit $20 per month in the account, beginning when the boy is 13 months old. The savings and loan association has a current interest policy of 6% per annum,
Mary Lavor plans to save money at her bank for use in December. She will deposit $30 a month, beginning on March 1and continuing through November 1. She will withdraw all the money on December 1. If the bank pays 1/2% interest each month, how much money will she receive on December 1?
Derive an equation to find the end of year future sum F that is equivalent to a series of n beginning-of-year payments B at interest rate i. Then use the equation to determine the future sum F equivalent to six B payments of $100 at 8% interest.
If $200 is deposited in a savings account at the beginning of each of 15 years, and the account draws interest at 7% per year, how much will be in the account at the end of 15 years?
A company deposits $2000 in a bank at the end of every year for 10 years. The company makes no deposits during the subsequent 5 years. If ~e bank pays 8% interest, how much would be in the account at end of 15 years?
How much must be deposited now at 5.25% interest to produce $300 at the end of ~very year for 10 years?
Using linear interpolation, determine the value of (P / A, 61/2%,10) from the compound interest tables. Compute this same value using the equation. Why do the values differ?
A student wants to have $30,000 at graduation 4 years from now to buy a new car. His grandfather gave him $10,000 as a high school graduation present. How much must the student speech year if he deposits the $10,000 today and can earn 12% on both the $10,000 and his earnings in a mutual fund his
A city engineer knows that she will need $25 million in 3 years to' replace toll booths on a toll road in the city. Traffic on the road is estimated to be 20 million vehicles per year. How much per vehicle should the toll be to cover the cost of the toll booth replacement project? Interest is 10%.
A man wants to help provide a college education for his young daughter. He can afford to invest $600/yr for the next 4 years, beginning on the girl's fourth birthday. He wishes to give his daughter $4000 on her 18th, 19th, 20th, and 2Pt birthdays, for a total of $16,000. Assuming 5% interest, what
How many months will it take to payoff a $525 debt, with monthly payments of $15 at the end of each month, if the interest rate is 18%, compounded monthly?
For how many months, at an interest rate of 1% per month, does money have to be invested before it will double in value?
A bank recently announced an "instant cash" plan for holders of its bank credit cards. A cardholder may receive cash from the bank up to a preset limit (about $500). There is a special charge of 4% made at the time the "instant cash" is sent to the cardholders. The debt may be repaid in monthly
A man borrowed $500 from a bank on October 15th. He must repay the loan in 16 equal monthly payments, due on the 15th of each month, beginning November 15th. If interest is computed at 1% per month, how much must he pay each month?
In Table 3-1 in the text, four plans were presented for the repayment of $5000 in 5 years with interest at 8%. Still another way to repay the $5000 would be to make four annual end-of-year payments of $1000 each, followed by a final payment at the end of the fifth year. How much would the final
An engineer borrowed $3000 from the bank, payable in six equal end-of-year payments at 8%. The bank agreed to reduce the interest on the loan if interest rates declined in the United States before the loan was fully repaid. At the end of 3 years, at the time of the third payment, the bank agreed to
A $ 150 bicycle was purchase don December 1with a $15 down payment the balance is to be paid at the rate of $10 at the end of each month, with the first payment due on December 31. The last payment may be some amount less than $10. If interest on the unpaid balance is computed at 11/2%per month,
A company buys a machine for $12,000, which it agrees to pay for in five equal annual payments, beginning one year after the date of purchase, at an interest rate of 4% per annum. Immediately after the second payment, the terms of the agreement are changed to allow the balance due to be paid off in
An engineering student bought a car at a local used car lot. Including tax and insurance, the total price was $3000. He is to pay for the car in 12 equal monthly payments, beginning with the first payment immediately (in other words, the first payment was the down payment). Nominal interest on the
A realtor sold a house on August 31, 1997, for $150,000 to a buyer in which a 20% down payment was made. The buyer took a 15-year mortgage on the property with an effective interest rate of 8% per annum. The buyer intends to payoff the mortgage owed in yearly payments starting on August 31,
To provide for a college education for his daughter, a man opened an escrow account in which equal deposits were made. The first deposit was made on January 1, 1981, and the last deposit was made on January 1, 1998. The yearly college expenses including tuition were estimated to be $8000, for each
Develop a complete amortization table for a loan of $4500, to be paid back in 24 uniform monthly installments, based on an interest rate of 6%. The amortization table must include the following column headings: Payment Number, Principal Owed (beginning of period), Interest Owed in Each Period,
Using the loan and payment plan developed in Problem 4-40 determine the month that the final payment is due, and the amount of the final payment, if $500 is paid for payment 8 and $280 is paid for payment 10. This problem requires a separate amortization table giving the balance due, principal
A couple borrowed $80,000 at 7% to purchase a house. The loan is to be repaid in equal monthly payments over a 30-year period. The first payment is paid exactly at the end of the first month. Calculate the interest and principal in the second payment, if the second payment is made 33 days after the
Jim Duggan made an investment of $10,000 in a savings account 10 years ago. This account paid interest of 51/2% for the first 4 years and 61/2% interest for the remaining 6 years. The interest charges were compounded quarterly. How much is this investment worth now?
Consider the cash flow:Year Cash Flowo -$1001 +502
Consider the following cash flow:Year Cash Flow0 -$P1 +10002
It is estimated that the maintenance cost on a new car will be $40 the first year. Each subsequent year, this cost is expected to increase by $10. How much would you need to set aside when you bought a new car to pay all future maintenance costs if you planned to keep the vehicle for 7 years?
A young engineer wishes to become a millionaire by the time he is 60 years old. He believes that by careful investment he can obtain a 15% rate of return. He plans to add a uniform sum of money to his investment program each year, beginning on his 20th birthday and continuing through his 59th
The council members of a small town have decided that the earth levee that protects .the town from a nearby river should be rebuilt and strengthened. The town engineer estimates that the cost of the work at the end of the first year will be $85,000. He estimates that in subsequent years the annual
A company expects to install smog control equipment on the exhaust of a gasoline engine. The local smog control district has agreed to pay to the firm a lump sum of money to provide for the first cost of the equipment and maintenance during its l0-year useful life. At the end of 10 years the
A debt of $5000 can be repaid, with interest at 8%, by the following payments.Year Payment1 $ 5002 10003
A man is purchasing a small garden tractor. There will be no maintenance cost during the first 2 years because the tractor is sold with 2 years free maintenance. For the third year, the maintenance is estimated at $20. In subsequent years the maintenance cost will increase by $20 per year (i.e.,
Mark Johnson saves a fixed percentage of his salary at the end of each year. This year he saved $1500. For the next 5 years, he expects his salary to increase at an 8% annual rate, and he plans to increase his savings at the same 8% annual rate. He invests his money in the stock market. Thus there
The Macintosh Company has an employee savings plan that allows every employee to invest up to 5% of his or her annual salary. The money is invested in company common stock with the company guaranteeing that the annual return 'rill never be less than 8%. Jill was hired at an annual salary of

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