Cases in Engineering Economy 2 nd by Peterson & Eschenbach 1

Case 11 Harbor Delivery

Teaching Notes:
1. Cell B46 is set up to use Goal Seek to find the breakeven point (Option) by guessing Nautical miles/day.
2. Problem best solved with EAW since lives different. If PW is used a common horizon (12 years) must be chosen.
3. The $500 insurance cost is treated as a cost for gas powered, but it could be a savings for diesel.
4. The timing of oil changes is based on number of operating hours/day in practice more occur if done at night when 100 hours will
be exceeded during the coming day.

18% MARR
200 Nautical miles/day
18 Hours/day of operation
365 Days/year

Gasoline Diesel
$76,586 $97,995 Purchase price
3 4 Life
$500 Insurance ($/yr)
21.1 17.4 Average speed (Knots)
$50 0 Value of higher speed ($/day)
26 17 Fuel consumption (gal/hr)
0 1 Fuel consumption when idling
$3.15 $2.95 Fuel cost ($/gal)
$15 $15 Cost/refueling
300 300 Fuel capacity (gal)
$25 $57 Oil change cost/change
100 100 Hours between oil changes
$6,000 $9,000 Annual maintenance cost
$38,000 $48,000 Salvage value

Calculated cells
18.0 18.0 Hours of power unit operation/day
0.0 1.0 Hours of idling/day
468 306 Fuel (gal/day)
57 53 Fueling cost/day
$20,696 $19,382 Fuel cost/year
$5,475 $5,475 Fueling cost/year
$1,643 $3,745 Oil change cost/year
6,000 9,000 Annual maintenance cost
$33,813 $37,601 Annual operating costs
$18,250 - Annual value of higher speed

$76,586 $97,995 EAC (Purchase) equivalent annual cost

$38,000 $48,000 EAC (Salvage)
$23,740.67 $26,153.25 EAC

-$2,413 Diesel EAC advantage

$23,740.67