engineering economics analysis

EGCP 401 Spring 2015

Homework 6 Due: February 25, 2015

A general contractor is interested in buying new construction equipment for grading with a purchase price of $84,000. The annual interest rate is 5% compounded annually. The following information is available for the equipment: Maintenance cost:

1. Oil change and light maintenance = $60/month 2. Major maintenance schedule

Year Major maintenance cost

1 $900 2 $900 3 $6,800 4 $900 5 $2,300

Operation cost:

1. Driver/operator (annually) = $40,300 for the first year with 4% annual increase 2. Garage cost = $240/month

Income/benefit information:

1. Lease to others = $600/month 2. In-house use = $5,000/month

A) Determine the present worth of benefit B) Determine the Equivalent Uniform Annual Benefit, EUAB C) Determine the present worth of the maintenance cost D) Determine the present worth of the operation cost E) Determine the present worth of all of the expenses F) Determine the Equivalent Uniform Annual Cost, EUAC G) Determine the Equivalent Uniform Annual Worth, EUAW