Engineering economy

Name: Trần Võ Khánh Huyền

ID: IELSIU18265

HOMEWORK CHAP 2:

2-2)

Variable
Fixed cost
cost
Raw materials x
Direct labor x
Depreciation x
Supplies x
Utilities x x
Property taxes x
Interest on borrowed
x
money
Administrative salaries x
Payroll taxes x x
Insurance (building and
x
equipment)
Clerical salaries x
Sales commissions x
Rent x
2-3)

a) We have: 1000000 miles/year = miles/day # cows?

15 miles/day 1 cow

# cows = cows

We have: 60 miles/day $5

miles/day $x

x= => Annual cost = x /year

b) We have: 30 miles 1 gallon

1000000 miles x gallons

x= gallons

We have: 1 gallon $3
 gallons cost

Cost = /year

 The gasoline-fueled car cost $100000 – $83333.33 = $16666.67/year more than a fleet of
car.

2-7)

If the value of re-machining option ($60000) is reasonably certain, this option should be chosen.

If the management is highly risk advance, the second option is recommended

2-12)

We have: D = (2000 – p) / 0.1 => a = 2000, b = 0.1

TR = aD – bD2 = 2000D – 0.1D2

 D = 10000 units/month

What are needed to maximum profit is fixed cost per month and variable cost per lash adjuster.

2-18)

a) Profit = TR – TC = pD – (Cf + cvD) = 1 x 20000 x 2000 – (17000000 + 20000000) = $3000000

b) Production is 17000 tons/year

Profit = TR – TC = pD – (Cf +cvD) = 1 x 17000 x 2000 – (17000000 + 20000000) = -$3000000

 Profit = 0. Therefore, the mine will not be profitable.

2-25)

Cf = $200000/year Cv = 60% x 300000 = $180000

Profit (Loss) = TR – TC = 300000 – (200000 + 180000) = -$80000 => Choose (d) ($80000) loss

2-28)

The cost increases to $0.15 per kWh and the cost of insulation quadruples

( )

R11 R19 R30 R38

A. Investment cost $2400 $3600 $5200 $6400
B. Annual heating load
74 x 106 69,8 x 106 67,2 x 106 66,2 x 106
(Btu/year)
C. Cost of heat loss per
$3252,3 $3067,71 $2953,44 $2909,49
year
 D. Cost of heat loss over 25
$81307,5 $76692,75 $73836 $72737,25
years
E. Total life cycle cost (A +
$83707,5 $80292,75 $79036 $79137,25
D)

 Choose R30

2-30)

Total extra cost = ( )

2-44)

a, False b, False c, True d, False e, True f, True

g, False h, True i, True j, False k, True l. False

m, True n, True o, True p, False q, False r, True

s, True

HOMEWORK CHAPTER 4:

4-2)

I = (P)(N)(i) = $1000 x x 0.06 = $103.92

So, the future equivalent after years is: 1000 + 103.92 = $1103.92

4-4)

Simple interest: I = (P)(N)(i) = 0.05Pi

Compound interest: I = P –P=P –P

We have: I / I I<I
– –

Therefore, the simple interest is less than the compound interest.

4-8)

A = P(A/P, i%, N) = 10000* + = $2374

So, annual equal loan payment (annuities) is $2374

Amount owed Interest Principal

Year Annuities
at begin of year payment payment
1 10000 600 1774 2374
2 8226 493,56 1880,44 2374
 3 6345,56 380,7336 1993,266 2374
4 4352,2936 261,1376 2112,862 2374
5 2239,431216 134,3659 2239,634 2374

4-9)

F = A(F/A, i%, N) =

4-10)

Loan with 12%: F = P(1 + i)N = 5000(1 + 0.12)5 = $8811.71

Loan with 8.5$: F = P(1 + i)N = 5000(1 + 0.085)5 = $7518.28

Difference: $1293.43

4-12)

F = P(1 + i)N 1000 = P(1 + 0.09)5 = $649.93

4-13)

A = F(A/F, i%, N) =

4-14)

A = F(A/F, i%, N) = = 432.61  N = 47 months

4-24)

P = -$50000 + $7500(P/A, 7%, 10) = -$50000 + $7500(7.0236) = $2677

The investment is worthwhile.

4.30)

$10000 = $2000000(A/F, 10%, N) = => N = 32 years