1. You need to run a stainless steel pipe and the diameter of the pipe affects the operating costs of the pump and the installation costs of the pipe. Determine the optimum diameter based on the following:

Installation and material costs of the pipe go up with diameter (d, in inches) according to the relationship $4250*d.

After its 20 year life, the salvage value of the pipe with be $900*d.

As the diameter gets larger, it reduces the friction and the annual energy costs of the pump according to the relationship $1300/d.

The pipe has a 20 year lifetime and interest is estimated at 7% over that lifetime.

The capital costs of this pipe will vary based on the diameter of the pipe. Which of the following shows the correct relationship for the capital costs?

Group of answer choices

a. $212.50*d

b. $379.22*d

c. $401.17*d

d. $4250*d

2. Mustang Auto Parts is considering one of two work trucks for its assembly plant.

Truck A costs $15,000 and requires $3000 annual operating expenses. It will have a value of $5000 after its 3 year lifetime.

Truck B costs $20,000 and requires $2000 annual operating expenses. It will have a value of $8000 after its 4 year lifetime.

Use Annual Equivalent Value analysis at an MARR of 12% to evaluate these two vehicles over the expected usage of 12 years. What is the annual equivalent value of JUST truck B over a 12 year period?

3. Mustang Auto Parts is considering one of two work trucks for its assembly plant.

Truck A costs $15,000 and requires $3000 annual operating expenses. It will have a value of $5000 after its 3 year lifetime.

Truck B costs $20,000 and requires $2000 annual operating expenses. It will have a value of $8000 after its 4 year lifetime.

Use Annual Equivalent Value analysis at an MARR of 12% to evaluate these two vehicles over the expected usage of 12 years. Which of the following is TRUE?

Group of answer choices

a. Truck A is the more economical option

b. Truck B is the more economical option

c. There is very little difference between the two options (less than $100 per year)

d. There is not enough information to estimate which is more economical