Engineering Economic Analysis

6-5 For the diagram, compute the value of D:

Problems

6-9 On April 1 a man borrows $100. The loan is to be

repaid in three equal semiannual (every 6 months)

payments. If the annual interest rate is 7% com-

pounded semiannually, how much is each payment?

(Answer: $35.69)

An electronics firm invested $60,000 in a precision

inspection device. It cost $4000 to operate and main~

tain in the first year and $3000 in each of the subse-

quent years. At the end of 4 years, the firm changed

their inspection procedure, eliminating the need for

the device. The purchasing agent was very fortunate

in being able to sell the inspection device for $60,000,

the original price. The plant manager asks you to com~.

pute the equivalent uniform annual cost of the device

during the 4 years it was used. Assume interest at 10%

per year. (Answer: $9287)

A firm is about to begin pilot plant operation on a pro-

cess it has developed. One item of optional equipment

that could be obtained is a heat exchanger unit. The

company finds that a unit now available for $30,000

could be used in other company operations. It is es-

timated that the heat exchanger unit will be worth

$35,000 at the end of 8 years. This seemingly high sal-

vage value is due primarily to the fact that the $30,000

purchase price is really a rare bargain. If the firm

believes 15% is an appropriate rate of return, what

annual benefit is needed to justify the purchase of the

heat exchanger unit? (Answer: $4135)

6-12 The maintenance foreman of a plant in reviewing his

records found that a large press had the following

maintenance cost record:

1.5D

t t r t t

0-1-2-3-4-5

1

i=12%

500

~ ~

i r t ~ t r i

0-1-2-3-4-5-6-7

~ ~ ~ ~ ~ ~ ~

A A A A A A A

6-8 As shown in the cash flow diagram, there is an annual
disbursement of money that varies from year to year
from $100 to $300 in a fixed pattern that repeats
forever. If interest is 10%, compute the value ofA,
also continuing forever, that is equivalent to the fluc-
tuating disbursements.

-. -~

300 300 300

It T r T T T r T It T r T

0-1-2-3-4-5-6-7-g-9-1O-1l-12 n = co

!!!!!!!!!!!!

A A A A A A A A A A A A

i = 10%

5 yearsago

4 years ago

3 years ago

2 years ago

Last year

$ 600

700

800

900

1000

6-6 What is C in the accompanying figure?

6-10

40

i

30

r

20

t

10 10

!!

0-1-2-3-4-5

C C C C

i = 10%

6-11

6-7 If interest is 10%, what isA?