Problems

UNIT 1
Prob. 1
• A large retailer is going to run an experiment at one of its stores to see how cost
effective it will be to imbed merchandise with small radio frequency identification
(RFID) chips. Shoppers will select items from the store and walk out without stopping
to pay at a checkout lane. The RFID chips will record what items are taken and will
automatically deduct their price from shoppers’ bank accounts. The retailer expects
to save the cost of staffing 12 checkout lanes, which amounts to $100,000 per year.
How much can the retailer afford to spend on its RFID investment if the system has a
life of 10 years and no residual value? The retailer’s interest rate is 15% per year.
 Prob. 2
• An expenditure of $20,000 is made to modify a material-handling system in a small job
shop. This modification will result in first-year savings of $2,000, a second-year savings
of $4,000, and a savings of $5,000 per year thereafter. How many years must the
system last if an 18% return on investment is required? The system is tailor made for
this job shop and has no market (salvage) value at any time.
 3.
• Maintenance expenses for a bridge on the Ohio River are estimated to be
$20,000 per year for the first 8 years, followed by two separate $100,000
expenditures in years 12 and 18. The expected life of the bridge is 30 years. If i =
6% per year, what is the equivalent uniform annual expense over the entire 30-
year period?
4
• An electronic device is available that will reduce this year’s labor costs by $8,000.
The equipment is expected to last for 10 years. Labor costs increase at a rate of
5% per year and the interest rate is 10% per year.
• a. What is the maximum amount that we could justify spending for the device?
• b. What is the uniform annual equivalent value (A) of the labor costs over the
eight-year period?
 5
• A piece of new equipment has been proposed by engineers to increase the
productivity of a certain manual welding operation. The investment cost is
$25,000, and the equipment will have a market value of $5,000 at the end of a
study period of five years. Increased productivity attributable to the equipment
will amount to $8,000 per year after extra operating costs have been subtracted
from the revenue generated by the additional production. If the firm’s MARR is
20% per year, is this proposal a sound one? Use the PW method.
 6
• A retrofitted space-heating system is being considered for a small office building. The
system can be purchased and installed for $110,000, and it will save an estimated
300,000 kilowatt-hours (kWh) of electric power each year over a six-year period. A
kilowatt-hour of electricity costs $0.10, and the company uses a MARR of 15% per year
in its economic evaluations of refurbished systems. The market value of the system will
be $8,000 at the end of six years, and additional annual operating and maintenance
expenses are negligible. Use the PW method to determine whether this system should
be installed
7
• A corporate jet costs $1,350,000 and will incur $200,000 per year in
fixed costs (maintenance, licenses, insurance, and hangar rental) and
$277 per hour in variable costs (fuel, pilot expense, etc.). The jet will
be operated for 1,200 hours per year for five years and then sold for
$650,000. The MARR is 15% per year. What is the EUAC of the jet?
8
• An office supply company has purchased a light duty delivery truck for
$15,000. It is anticipated that the purchase of the truck will increase
the company’s revenue by $10,000 annually, whereas the associated
operating expenses are expected to be $3,000 per year. The truck’s
market value is expected to decrease by $2,000 each year it is in
service. If the company plans to keep the truck for only 5 years, what
is the annual worth of this investment? The MARR = 18% per year.
9
• An assembly operation at a software company now requires $100,000
per year in labor costs. A robot can be purchased and installed to
automate this operation. The robot will cost $200,000 and will have
no market value at the end of the 10-year study period. Maintenance
and operation expenses of the robot are estimated to be $64,000 per
year. Invested capital must earn at least 12% per year. Determine if
the robot is a justifiable investment.
10
• A large induced-draft fan is needed for an upgraded industrial
process. The motor to drive this fan is rated at 100 horsepower, and
the motor will operate at full load for 8,760 hours per year. The
motor’s efficiency is 92%. Because the motor is fairly large, a demand
charge of $92 per kilowatt per year will be incurred in addition to an
energy charge of $0.08 per kilowatt-hour. If the installed cost of the
motor is $4,000, what is the present worth of the motor over a 10-
year period when the MARR is 15% per year?
11
• Your company is considering the introduction of a new product line.
The initial investment required for this project is $500,000, and
annual maintenance costs are anticipated to be $45,000. Annual
operating costs will be directly proportional to the level of production
at $8.50 per unit, and each unit of product can be sold for $65. If the
MARR is 15% and the project has a life of 5 years, what is the
minimum annual production level for which the project is
economically viable?
12
• A plasma arc furnace has an internal combustion temperature of
7,000◦C and is being considered for the incineration of medical wastes
at a local hospital. The initial investment is $300,000 and annual
revenues are expected to be $175,000 over the six-year life of the
furnace. Annual expenses will be $100,000 at the end of year one and
will increase by $5,000 each year thereafter. The resale value of the
furnace after six years is $20,000.
13
•A company is planning to install a new automated plastic-molding press. Two different presses are available. The initial capital
investments and annual expenses for these alternatives are as follows:
Press P1 P2
Capital investment $24,000 $30,400
Useful life (years) 5 5
Annual expenses Power 2,720 4,800
Labor 26,400 24,000
Maintenance 1,600 1,800
Property taxes and insurance 480 608
Total annual expenses $31,200 $29,128
Assume that each press has the same output capacity (120,000 units per year) and has no market value at the end of its useful life;
the selected analysis period is five years; and any capital invested is expected to earn at least 10% per year. Which press should be
chosen if 120,000 non-defective units per year are produced by each press and all units can be sold? The selling price is $0.375 per
unit.
14
• You are a member of an engineering project team that is designing a new processing facility. Your present design task involves the portion
of the catalytic system that requires pumping a hydrocarbon slurry that is corrosive and contains abrasive particles. For final analysis and
comparison, you have selected two fully lined slurry pump units, of equal output capacity, from different manufacturers. Each unit has a
large-diameter impeller required and an integrated electric motor with solid-state controls. Both units will provide the same level of service
(support) to the catalytic system but have different useful lives and costs.
• 
• Pump Model SP240 HEPS9
• Capital investment $33,200 $47,600
• Annual expenses: Electrical energy $2,165 $1,720
• Maintenance $1,100 in year 1 increasing $500/yr/yr $500 in year1 increasing $100/yr/yr
• Useful life (years) 5 10
• Market value (end of useful life) $100 $5,000

• The new processing facility is needed by your firm at least as far into the future as the strategic plan forecasts operating requirements. The
MARR is 20% per year. Based on this information, which slurry pump should you select?
15
• A cement plant plans to open a new rock pit. Two plans have been
devised. Plan A requires the purchase of two earth movers and
construction of an unloadind pad. Plan B calls for construction of a
conveyor system. Which plan should be selected (i=9%).
Plan B
Plan A
Mover Pad Conveyor
P $45000 $28000 $175000
2500
AOC $6000 $300
SV 5000 2000 10000
12
Life 4 8
Prob 16
• Two different machines are being considered for a certain process.
Machine x has a first cost of $12000 and annual operating expenses of
$3000 per year with a $500 increase every year from the end of 3
year. It is expected to have a life of 8 years with a sv of $1000. A major
overhaul is also needed at the end of every 3 year at a cost of $2500.
machine y can be purchased for $21000 with an annual operating cost
of $1500 every year till year 5 and after that there is a decrease in
AOC by $100 evry year. One time overhaul is also required at the end
of 5th year at a cost of $3000. The life of the machine is 10 years with
a resale value of $1500. if i=8% compare the alternatives.
Why Use 3D?
2D Slides 3D Models

Slides are a static portrait. 3D helps foster conceptual understanding

and visual and spatial thinking.

Audience is passive and cannot interact. Animated 3D models display objects within
space in ways text and images cannot.
No 3D Model? No Problem!

 
Microsoft makes it easy to insert a 3D Model!
Simply go to the Insert Ribbon and click on the
3D Models option. Choose the option for online
sources gallery (shown at the right). Select the
model you wish to insert.

 
3D Models is a subscription-only feature. If you
have an Office 365 subscription, the next slide
shows you how it works in a new presentation.
 How to Insert a 3D Model
• To Insert a 3D Model:
•From the Ribbon, go to
1 Insert > 3D Models
-or-
Insert > 3D Models from Online
Sources
That will open the Online 3D Models
Window where you can search or
browse categories of various 3D
models, right from within PowerPoint.
•Hint: You need to be online when
you add the model.
•To search for a keyword, type a word
2 or phrase into the search box at the top
of the window and press enter.

•To insert a 3D Model, click or tap on

3
the model > Insert.
•The 3D Model will now be downloaded
and placed onto your PowerPoint slide.
 Have Your Own 3D Model? You Can Import
It!
PowerPoint allows you to import a variety of popular 3D
model formats.

So no matter your workflows outside of PowerPoint, you

should be able to find a suitable solution to make your 3D
models portable and presentable to virtually anyone,
anywhere and on any device (with just a few quick
modifications)

To Insert a 3D Model:

1 Go to Insert > 3D Models from a File…
This will open the Insert 3D Model Window where
you can search your computer, network or cloud
drive for any saved 3D models.
2 Insert the 3D model by selecting the file and
clicking on Insert.
The 3D Model will now be placed onto your
PowerPoint slide
 Two Ways to Position and Rotate Your 3D
Model
Try them yourself with the parrot on the right:

1 Click on your 3D Model: Click and

hold on the 3D control to rotate or
tilt your 3D model up, down, left,
and right. 3D Control

2 Alternatively, with your model selected, on the

Ribbon, in the 3D Model Tool Format tab, you can
click on 3D Model Views gallery to apply one of
the various position views.
 Pan and Zoom
To resize or crop your 3D model within a frame, you can use the pan and zoom tool.

1 Select your 3D model > 3D Models 2 With the Pan & Zoom button enabled, now 3 When you are finished editing, click
Format > Pan & Zoom move, rotate, and resize your 3D model. the Pan & Zoom button again to
exit Pan and Zoom mode.
Note: the Pan & Zoom tool acts like an
on/off (toggle) switch. Once pressed,
you’ll see a gray box around the Pan &
Zoom button to indicate the feature is
activated. Press the button again to
deactivate the Pan & Zoom feature.
 Now Animate Your 3D Model Using the
Morph Transition
Try it yourself with the parrot on the right:

1 Duplicate this slide: Right-click

the slide thumbnail and select
Duplicate Slide.

2 In the second of these two

identical slides, change the 3D
Model on the right in some way
(rotate, move, or resize), then go
to Transitions > Morph.

3 Return to the first of the two slides and

press the Slide Show button and then
select Play to see your parrot morph!
 Animate Your 3D Model Using the
Animations Tab
Try it yourself with the parrot on the right:

1 Select the 3D Model on the right, then go to Animations > Turntable

Hint: Effect Options gives you even more options for Turntable.

2 Explore the other new animations designed specifically for 3D models:

Arrive, Swing, Jump & Turn, and Leave.

3 Click Add Animation to combine the new 3D animations with other

classic 2D animations, such as Fade, Grow/Shrink, or one of the many
Motion Path animations to test and see what is possible.
More questions about PowerPoint?

Select the Tell Me button and type what you want to

know.
Visit the PowerPoint team blog

Go to free PowerPoint training

SELECT THE ARROW WHEN IN SLIDE SHOW MODE