Engineering Economics and Mgmt

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CE 3361 NAME:____________________

PROJECT IIB DATE:_____________________

SHOW ALL WORK AND CALCULATIONS

DO NEAT AND PROFESSIONAL WORK

DUE: 14 MARCH 2017

1. GIVEN THE FOLLOWING CASH TRANSACTIONS. IT IS YOUR

RESPONSIBILITY TO PERFORM AN ECONOMIC ANALYSIS ON YOUR

ASSIGNED ALTERNATIVE.

ALTERNATE B

INITIAL INVESTIMENT $ 80,000

OPERATIONS AND $ 900/YR

MAINTENANCE

GPS UPGRADES $ 3,300/EVERY

2 YEARS

INSURANCE $ 1,200/YR

REVENUE $ 20,000 YEAR 1

INCREASE $2,500/YR

SALVAGE $ 8,000

USEFUL LIFE 6 YEARS

INTEREST ON COST 5 %/YR

INTEREST ON REVENUE 1.5%/YR

ANSWER THE FOLLOWING QUESTIONS AND FILL-IN ALL BLANK SPACES

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CE 3361 NAME:____________________

PROJECT IIB

SHOW ALL WORK AND CALCULATIONS

(10) 1. WHAT IS THE ALTERNATE B PAYMENT PERIOD: ___________________

2. IF THE QUARTERLY INTEREST RATE ON THE INVESTMENT IS 4.3%

COMPOUNDED DAILY, CALCULATE THE EFFECTIVE ANNUAL

INTEREST RATE?

(20)

3. DETERMINE THE PRESENT WORTH OF ALTERNATE B.

i = 5%/YR

COST n = 6 YEARS

ELEMENT n P/F P/A PRESENT SOURCE

WORTH

-$ 80,000 0 - - $

-$ 3,300 2 - $ TABLE

-$ 3,300 4 - $ TABLE 10

-$ 3,300 6 - $

-$ 1,200 6 - $

-$ 900 6 - $

PRESENT WORTH COST: - $

i = 1.5%/YR

REVENUE n = 6 YEARS

ELEMENT n P/F P/A P/G PRESENT SOURCE

WORTH

$ 20,000 6 - - $

$ 2,500 6 - $ TABLE 6

$ 8,000 - $

PRESENT WORTH REVENUE: $

NET PRESENT WORTH: $___________

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CE 3361 NAME:____________________

PROJECT IIB

BE YEE NEAT

SHOW ALL WORK AND CALCULATIONS

4. DETERMINE THE ANNUAL WORTH OF ALTERNATE B.

i = ____ /YR

COST n = ____ YEARS

ELEMENT PRESENT n A/P ANNUAL SOURCE

WORTH WORTH

-$ 80,000 -$ 6 - $

-$ 3,300 - $ TABLE

-$ 3,300 -$ - $

-$ 3,300

-$ 1,200 - $

-$ 900 - $ 900

ANNUAL WORTH COST: - $

i = ____ /YR

REVENUE n = ____ YEARS

ELEMENT PRESENT n A/P ANNUAL SOURCE

WORTH WORTH

$ 20,000 $ $ 20,000

$ 2,500 $ 6 $ TABLE

$ 8,000 $ $

ANNUALWORTH REVENUE: $

NET ANNUAL WORTH: $___________

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CE 3361 NAME:____________________

PROJECT IIB

BE YEE NEAT

SHOW ALL WORK AND CALCULATIONS

4. DETERMINE THE FUTURE WORTH OF ALTERNATE B.

i = ____ /YR

COST n = ____ YEARS

ELEMENT PRESENT n F/P FUTURE SOURCE

WORTH WORTH

-$ 80,000 -$ 80,000 - $

-$ 3,300 - $ TABLE

-$ 3,300 -$ - $

-$ 3,300 - $ 3,300 TABLE

-$ 1,200 - $

-$ 900 - $

FUTURE WORTH COST: - $

i = ____ /YR

REVENUE n = ____ YEARS

ELEMENT PRESENT n F/P FUTURE SOURCE

WORTH WORTH

$ 20,000 $ $

$ 2,500 9 $ TABLE

$ 8,000 $ $ 8,000

FUTURE WORTH REVENUE: $

NET FUTURE WORTH: $___________

5A. IS THE CAPITALIZED COST

SHORT TERM LONG TERM

HALF TERM MID TERM

5B. CALCULATE THE CAPITALIZED COST

CCT = AWC/i CCT =

CCT = -$ - CCT =

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CE 3361 NAME:____________________

PROJECT IIB

SHOW ALL WORK AND CALCULATIONS

6. AT AN INTEREST RATE OF 3% ON THE NET CASH FLOW, CALCULATE THE

PAYBACK PERIOD FOR ALTERNATE B:

i = 3%

0 = - PW + Σ AW NCF

PW = -$

AW NCF

AW REVENUE AW COST

$ 20,000

-

- -$

- -$ 900

$ $

Σ AW NCF:__________________

P/A = ______________

P/A = ______________

YEAR P/A ∆ SOURCE

TABLE

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nP = __________YRS

nP = __________YRS

NAME _____________________________________

SIGNATURE:_______________________________

BY SIGNING THIS PAGE, I CERTIFY THAT I HAVE NOT GIVEN

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