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  • Dec 2016 Q4

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    Chahak Bhalla
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    The document discusses different methods for evaluating the economic feasibility of two capital investment alternatives: a robotic arm and an electric hoist. It calculates the equivalent annual worth and present worth of each option using various interest rates and time periods. In each case, it determines that the robotic arm has a lower annual or present worth cost, making it the more economical choice according to those metrics. Finally, it concludes that both the annual worth method and present worth method lead to selecting the robotic arm as the preferred investment option.

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    Solution to Engineering Economics Exam December 2016 Q4

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    The document discusses different methods for evaluating the economic feasibility of two capital investment alternatives: a robotic arm and an electric hoist. It calculates the equivalent annual worth and present worth of each option using various interest rates and time periods. In each case, it determines that the robotic arm has a lower annual or present worth cost, making it the more economical choice according to those metrics. Finally, it concludes that both the annual worth method and present worth method lead to selecting the robotic arm as the preferred investment option.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    9 views2 pages

    Dec 2016 Q4

    Uploaded by

    Chahak Bhalla
    The document discusses different methods for evaluating the economic feasibility of two capital investment alternatives: a robotic arm and an electric hoist. It calculates the equivalent annual worth and present worth of each option using various interest rates and time periods. In each case, it determines that the robotic arm has a lower annual or present worth cost, making it the more economical choice according to those metrics. Finally, it concludes that both the annual worth method and present worth method lead to selecting the robotic arm as the preferred investment option.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

     a) The repeatability assumption and the coterminated assumption are the two types of

    assumptions made in comparing mutually exclusive alternatives of different lives.

    ____________________________________________________________________________________

    b) Equivalent Annual Worth of Robotic Arm = Present worth of Robotic Arm (A/P , 7% , 10 years)

    Present worth of Robotic Arm = 145,000+ 3,000 / 1.071 + $ 3,000 / 1.072 + $ 3,000 / 1.073 + $ 3,000 /
    1.074 + $ 3,000 / 1.075 + $ 5,000 / 1.076 + $ 5,000 / 1.077 + $ 5,000 / 1.078 + $ 5,000 / 1.079 +
    (5,000− 3,000) / 1.0710

    Present worth of Robotic Arm = $170,392.465

    Annual worth of Robotic Arm = $170,392.465 (A/P , 7% ,10 years)

    Annual worth of Robotic Arm = $170,392.465 7.023582

    Annual worth of Robotic Arm = $ 24,260

    Equivalent Annual Worth of Electric hoist = Present worth of Electric hoist   (A/P , 7% , 5 years)

    Present worth of Electric hoist = 9,000+ 300,400 / 1.071 + 300,400 / 1.072 + 300,400 / 1.073 + $ 300,700 /


    1.074 +   $ 299,700/ 1.075

    Present worth of Electric hoist = $ 1240429.088

    Equivalent worth of Electric hoist = $ 1240429.088/ 4.100197

    Equivalent worth of Electric hoist = $ 302,529.1438

    The Robotic Arm is more economical based on Annual worth

    _______________________________________________________________________________

    C)

    Present worth of Robotic Arm = 145,000+ 3,000 / 1.071 + $ 3,000 / 1.072 + $ 3,000 / 1.073 + $ 3,000 /
    1.074 + $ 3,000 / 1.075 + $ 5,000 / 1.076 + $ 5,000 / 1.077 + $ 5,000 / 1.078 + $ 5,000 / 1.079 +
    (5,000− 3,000) / 1.0710

    Present worth of Robotic Arm = - $170,392.465

    Present worth of Electric hoist = 9,000+ 300,400 / 1.071 + 300,400 / 1.072 + 300,400 / 1.073 + $ 300,700 /


    1.074 +   $ 299,700/ 1.075

    Present worth of Electric hoist = - $ 1,240,429.088

    The Robotic Arm is more economical based on Present worth

    ____________________________________________________________________________

    d) Present worth of Robotic Arm = 145,000+ 3,000 / 1.071 + $ 3,000 / 1.072 + $ 3,000 / 1.073 + $ 3,000 /
    1.074 - $ 22,000 / 1.075

    Present worth of Robotic Arm = - $ 139,475.9378


    The Robotic Arm is more economical based on Present worth

    ____________________________________________________________

    e) Both the Annual worth method and the present worth method leads to the same decision .

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