5.

(a) The do-nothing alternative means that the status-quo should be maintained. That is, if none of the alternatives
(b) Do-nothing is not an option when the alternatives being evaluated are cost alternatives, which means that one

5.4

Revenue alternatives have cash inflows and outflows, while cost alternatives have only costs.

5.6

Equal service can be satisfied by using a specified planning period or by using the least common multiple between

5.8

interest

10%

Year
0
1
2
3
4

MACHINE A
Cash Flow
$
(42,000.00)
$
(28,000.00)
$
(28,000.00)
$
(28,000.00)
$
(28,000.00)
$
(130,756.23)

Year
0
1
2
3
4

MACHINE B
Cash Flow
$
(51,000.00)
$
(17,000.00)
$
(17,000.00)
$
(17,000.00)
$
(17,000.00)
$
(104,887.71)

PWA

PWB

Select Machine B

5.10

interest
Stock

8%
1000

A
P0

$
$

30.00
30,000.00
6%

PWA = $133,839.24

CLASS A
Year
0
1
2
3
4
5

$
$
$
$
$
$

Cash Flow

A
P0

$
$

30,000.00
31,800.00
33,708.00
35,730.48
37,874.31
$133,839.24

PWA

20.00
20,000.00
12%

g
CLASS B
Cash Flow
0 $
1 $
2 $
3 $
4 $
5 $

Year

PWB

5.12

20,000.00
22,400.00
25,088.00
28,098.56
31,470.39
$99,710.07
Select Class A Stock

Quarter
0
1
2
3
4
5
6
7
8
9
10
11
12
Interest

Plan A
$
$
$
$
$
$
$
$
$
$
$
$
$

(1,500.00)
(1,500.00)
(1,500.00)
(1,500.00)
(1,500.00)
(1,500.00)
(1,500.00)
(1,500.00)
(1,500.00)
(1,500.00)
(1,500.00)
(1,500.00)
4%

$
$
$
$
$
$
$
$
$
$
$
$
$

Plan B
(21,000.00)
4,000.00
4%

Salvage Value
Present Worth

5.14

5.16

Year
0
1
2
3
4
5
Interest
Salvage Value
Present Worth

Year
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

$
$

$
(14,077.61) $
Select Plan A

$
$

Plan A
(8,000.00)
(1,450.00)
(1,450.00)
(1,450.00)
(1,450.00)
(1,450.00)
10%
(13,496.64)

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

Plan A
(215,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(52,000,000)

$
$
$
$
$
$

4,000.00
(18,501.61)

Plan B
$
$
$
$
$
$
$
$

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

(2,900.00)
(2,900.00)
(2,900.00)
(2,900.00)
(2,900.00)
10%
(10,993.28)
Select Plan B

Plan B
(350,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(72,000,000)

26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
Interest
Salvage Value
Present Worth

5.18

Year
0
1
2
3
4
5
6
7
8
9
10
Interest
Salvage Value
Present Worth

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

$
$
$
$
$
$
$
$
$
$
$

(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
(22,000,000)
15%
(362,442,651.66)
Select Plan A

Plan A
(5,000,000.00)
(5,500,000.00)
(5,500,000.00)
(5,500,000.00)
(5,500,000.00)
(5,500,000.00)
(5,500,000.00)
(5,500,000.00)
(5,500,000.00)
(5,500,000.00)
(5,500,000.00)
10%
0
(38,795,119.08)

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

$
$
$
$
$
$
$
$
$
$
$

(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
(2,000,000)
15%
(365,447,463.93)

Plan B
(5,000,000.00)
(25,000,000.00)
(30,000,000.00)
10%
0
(41,055,900.57)

Select Plan A

5.20
$
$
$

Seawater
First Cost
Present Worth at 12%
(20,000,000.00) $
(30,640,000.00)
(50,000,000.00) $
(36,310,000.00)
(20,000,000.00) $
(26,430,000.00)

Life n, years
10
10
5

$
$
$

Groundwater
First Cost
Present Worth at 12%
(22,000,000.00) $
(33,160,000.00)
(22,000,000.00) $
(33,160,000.00)
(22,000,000.00) $
(28,320,000.00)

XS

14,576,531.62

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

Plan A
(4,312,440.00)
(4,812,440.00)
-

Life n, years
10
5
5

5.22

Year
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

Plan B
(10,541,520.00)
-

25
26
27
28
29
30
Interest
Salvage Value
Present Worth

5.24

5.26

5.28

A.

Year
0
1
2
3
4
5
6
Interest
Salvage Value
Present Worth

Year
0
1
2
3
Interest
Salvage Value
Present Value
Future Worth

Year
0
1
2
3
4

$
$
$
$
$
$
$
$

$
$
$
$
$
$
$
$
$

$
$
$
$
$
$
$

$
$
$
$
$

$
$
$
$
$
$

8%
$
(5,829,521.79) $
Select Plan A

8%
(10,541,520.00)

Plan A
(130,000.00)
(95,000.00)
(95,000.00)
(200,000.00)
(95,000.00)
(95,000.00)
(70,000.00)
10%
25,000.00
(608,525.97)

Plan B
(900,000.00)
(60,000.00)
(60,000.00)
(60,000.00)
(60,000.00)
(60,000.00)
240,000.00
10%
300,000.00
(991,973.46)

Robot X
(80,000.00)
(30,000.00)
(30,000.00)
10,000.00
15%
40,000.00
(122,196.10)
(185,845.00)
Select Robot X

Plan A
(23,000.00)
(4,000.00)
(4,000.00)
(24,000.00)
(4,000.00)

$
$
$
$
$
$
$
$
$

$
$
$

Robot Y
(97,000.00)
(27,000.00)
(27,000.00)
23,000.00
15%
50,000.00
(125,771.27)
(191,282.38)

$
$
$
$
$

Plan B
(30,000.00)
(2,500.00)
(2,500.00)
(2,500.00)
(2,500.00)

$
$
$
$

5
6
Interest
Salvage Value
Present Value
Future Worth

5.30

5.32

Year
0
1
2
3
4
5
6
7
Interest
Salvage Value
Present Value
Future Worth
Difference

A.

B.

Year
0
1
2
3
4
5
Interest
Annual
Capitalized Cost
Year
0
1
2
3
4
5
Interest
Annual

$
$
$
$
$

(4,000.00)
(1,000.00)
8%
3,000.00
(55,477.65)
(88,036.07)

$
$
$
$
$

Plan A
$
$
$
$
$
$
$
$
$
$
$
$

(1,300,000.00)
(100,000,000.00)
10%
(76,205,860.26)
(148,503,663.00)

(2,500.00)
(1,500.00)
8%
1,000.00
(40,927.03)
(64,946.05)
Select Plan B

Plan B
$
$
$
$
$
$
$
$
$
$
$

(1,300,000.00)
(100,000,000.00)
10%
(52,497,630.00)
(102,303,029.30)
46,200,633.70

Cash Flow
$
$
$
$
$
$
$
$

(10,000.00)
3%
(1,883.55)
(62,784.86)
Cash Flow

$
$
$
$
$
$
$

(10,000.00)
8%
(1,704.56)

Capitalized Cost
C.

Difference

5.34

A.

B.

(21,307.06)

41,477.80

CCS

Desalinated Seawater
$
(53,580,000.00)

CCG

Purified Groundwater
$
(48,910,000.00)

When money earns at the lower 3% rate, it is ne

Contractor
Annual Cost
$
(5,000,000.00)
Interest
12%
Capitalized Cost $
(41,666,666.67)
Between the three options, select the Contractor
Year
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

Cash Flow
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

(5,000,000.00)
(5,100,000.00)
(5,202,000.00)
(5,306,040.00)
(5,412,160.80)
(5,520,404.02)
(5,630,812.10)
(5,743,428.34)
(5,858,296.91)
(5,975,462.84)
(6,094,972.10)
(6,216,871.54)
(6,341,208.97)
(6,468,033.15)
(6,597,393.82)
(6,729,341.69)
(6,863,928.53)
(7,001,207.10)
(7,141,231.24)
(7,284,055.86)
(7,429,736.98)
(7,578,331.72)
(7,729,898.35)
(7,884,496.32)
(8,042,186.25)
(8,203,029.97)

27
$
(8,367,090.57)
28
$
(8,534,432.38)
29
$
(8,705,121.03)
30
$
(8,879,223.45)
31
$
(9,056,807.92)
32
$
(9,237,944.08)
33
$
(9,422,702.96)
34
$
(9,611,157.02)
35
$
(9,803,380.16)
36
$
(9,999,447.76)
37
$
(10,199,436.72)
38
$
(10,403,425.45)
39
$
(10,611,493.96)
40
$
(10,823,723.84)
41
$
(11,040,198.32)
42
$
(11,261,002.28)
43
$
(11,486,222.33)
44
$
(11,715,946.78)
45
$
(11,950,265.71)
46
$
(12,189,271.03)
47
$
(12,433,056.45)
48
$
(12,681,717.58)
49
$
(12,935,351.93)
50
$
(13,194,058.97)
Interest
12%
Gradient
2%
Present Worth $
(49,534,330.86)
Annual
$
(5,964,758.85)
Capitalized Cost $
(49,706,323.76)
Between the three options, select the Purified Groundwater

5.36

Year
0
1
2
3
4
Interest
Present Worth
Annual
Capitalized Cost

Cash Flow
$
$
$
$
$
$
$
$

(1,000.00)
(1,000.00)
(1,000.00)
(6,000.00)
10%
(6,584.93)
(2,077.35)
(20,773.54)

PW = $6,584.93

5.38

P0

Interest
Annual
Present Worth
Capitalized Cost

$
$
$

(150,000.00)
6%
(83,333.33)
(17,799.93)
(251,133.26)

PW = $17,799.93

ENGINEERING ECONOMY
Chapter 5
Andre Riantiarno
1206201662

maintained. That is, if none of the alternatives under consideration are economically attractive, all of them should be rejected.
are cost alternatives, which means that one of them must be selected.

natives have only costs.

by using the least common multiple between the lives of the alternatives.

MACHINE A
0

1
$28,000

$28,000

$28,000

$28,000

$42,000

PWA = $130,756.23

MACHINE B
0

1
$17,000
$51,000

PWB = $130,756.23

2
$17,000

3
$17,000

4
$17,000

PWB = $99,710.07

$133,839.24

CLASS A

$37,874.31

$35,730.48

$30,000

$31,800

$33,708
$20,000

Plan A

1
$1,500

2
$1,500

$1,500

$1,500

$1,500

PW= $14,007.61

Plan A
0

$8,000

$1,450

$1,450

3
$1,450

$1,450

PW= $13,496.64

Plan A

1
$22,00,0000

2
$22,000,000

3
$22,000,000

4
$22,000,000

24
$22,000,000

$215,000,000

PW= $362,442,651.66

Plan B

24

$2,000,000

$2,000,000

3
$2,000,0000

$2,000,000

24

$2,000,000

$350,000,000

PW= $365,447,463.93

Plan A

$5,000,000
$5,500,000

PW= $38,795,119.08

$5,500,000

$5,500,000

$5,500,000

$5,500,000

ater
Selected
Yes
No
Yes

water
Selected
No
Yes
No

Plan A

$4,312,440

PW= $5,829,521.79

Plan B

$10,541,520

PW= $10,541,529

Plan C
$
$
$
$
$
$
$
$
$

B.

Year
Plan C
0
$
1
$
(120,000.00)
2
$
(120,000.00)
3
$
(144,000.00)
4
$
(144,000.00)
5
$
(172,800.00)
6
$
(172,800.00)
Interest
10%
Gradient
20%
Salvage Value
$
Present Worth $
(619,644.03)
In this case select Plan A

(120,000.00)
(120,000.00)
(120,000.00)
(120,000.00)
(120,000.00)
(120,000.00)
10%
(522,631.28)
Select Plan C

Robot X

$40,000

3
$30,000

$30,000

$30,000

$80,000

FW = $185,845

$3,000

Plan A

3
$4,000

PW= $608,525.97

$4,000
$4,000

$4,000

$4,000

$23,000

$23,000

Plan A
$1,300,0000

$100,000,000

$10,000

$10,000

n money earns at the lower 3% rate, it is necessary to start with more

$1,000

$1,000

3
$1,000

4
$1,000

$5,000

= $6,584.93

$5,000
$150,000

$5,000

$20,000

$17,799.93

m should be rejected.

CLASS B

$31,470.39

$28,098.56
$25,008

$22,400

$20,000

Plan B

12

11
$1,500

$1,500

PW= $18,501.61

$21,000

Plan B
5

$2,900

$2,900

PW= $10,993.28

nA

24

25

$22,000,000

49

$22,000,000

50
$22,000,000

$52,000,000

nB

24

25

49

50

3
$2,900

4
$2,900

5
$2,900

24

25

49

50

$2,000,000

$2,000,000

$2,000,000

$72,000,000

Plan B
0
$5,500,000

$5,500,000

$25,000,000

PW= $41,005,900.57

PW= $41,005,900.57

Plan A

14

15

$4,812,440

Plan B

29

30

29

30

$25,000

Plan A

$95,000

$95,000

$130,000

$95,000

$95,000

$95,000

$200,000

= $608,525.97

$50,000

Robot Y

3
$27,000

$27,000

$27,000

$97,000

FW = $191,282

$3,000

Plan B

$4,000
$2,500

$4,000
$4,000

$2,500

$2,500

$2,500

$2,500

$30,000

FW = $88,036.07

Plan A
$1,300,0000

FW = $148,503,663

$4,000

11

12

nB
7

$30,000,000

10

Plan B

0
$900,000

$60,000

$60,000

PW= $991,973.46

$1,000

6
$2,500

$2,500

3
$60,000

$60,000

$60,000

$2,500
$2,500

$2,500

FW = $64,946.05

Plan B
$100,000,000

FW = $102,303,029.30

$300,000

Plan C (A)

1
$120,000

$60,000

PW= $522,631.28

2
$120,000

3
$120,000

4
$120,000

Plan C (B)

6
$120,000

$120,000

1
$120,000

$120,000
$144,000

PW= $619,644.03

$144,000

Plan C (B)

$144,000

$172,800

$172,800