Question: Meggitt Systems, a company that specializes in

> In order to make CDs look more attractive as an investment than they really are, some banks advertise that their rates are higher than their competitors’ rates; however, the fine print says that the rate is based on simple interest. If you were to deposi

> A 5-year plan to raise extra funds for public schools involves an “enrichment tax” that will raise $56 for every student the first year, increasing by $1 per student per year thereafter. There are 50,000 students in the district in year one, 51,000 in ye

> El Paso Water is planning to install wind turbines to provide enhanced evaporation of reverse osmosis concentrate from its inland desalting plant. The company will spend $1.5 million in year 1 and $2 million in year 2. Annual maintenance is expected to c

> Determine the numerical value of the following factors using (a) linear interpolation, (b) the formula, and (c) the spreadsheet function from Figure 2-9. Figure 2-9 1. (P∕F,8.4%,15) 2. (A∕F,17%,10) 1 2 3 4 5 6 7 8

> List three evaluation criteria besides the economic ones for selecting the best automobile to purchase. Answer: The color I like, best fuel rating, roomiest, safest, most stylish, fastest, etc.

> A capital investment firm placed $1.5 million 2 years ago to acquire part-ownership in an innovative chip making company. How long will it take from the date of their initial investment for their share of the chip company to be worth $3 million, if the c

> Identify at least three noneconomic attributes that may be used as evaluation criteria in the decision making process.

> Define the term measure of worth. Identify three different commonly-applied measures.

> When faced with different alternatives, there are many criteria that can be used to identify the best one. What is the tangible criterion that is usually used in an engineering economic analysis?

> AutomationDirect, which makes 6-inch TFT color touch screen HMI panels, is examining its cash flow requirements for the next 5 years. The company expects to replace office machines and computer equipment at various times over the 5-year planning period.

> Determine the equivalent annual worth for years 1 through 10 of a uniform series of payments of $20,000 that begins in year 3 and ends in year 10. Use an interest rate of 10% per year. Also, write the single-cell spreadsheet function to find A.

> Costs associated with the manufacture of miniature high-sensitivity piezoresistive pressure transducers is, $73,000 per year. A clever industrial engineer found that by spending $16,000 now to reconfigure the production line and reprogram two of the robo

> A commercial real estate developer plans to borrow money to finance an upscale mall in an exclusive area of the city. The developer plans to get a loan that will be repaid with uniform payments of $400,000 over a 15-year period beginning in year 2 and en

> Determine the size of your investment account 30 years from now (when you plan to retire) if you deposit $12,000 each year, beginning 1 year from now, and the account earns interest at a rate of 10% per year.

> Atlas Long-Haul Transportation is considering installing Valutemp temperature loggers in all of its refrigerated trucks for monitoring temperatures during transit. If the systems will reduce insurance claims by $100,000 in each of the next 2 years, how m

> What is the present worth of an expenditure of $25,000 in year 8 if the interest rate is 10% per year?

> A rotary engine is the essence of a vertical takeoff and landing (VTOL) personal aircraft known as the Moller Skycar M400. It is a flying car known as a personal air vehicle (PAV) and it is expected to make its first untethered flight in 2020. The PAV ha

> Dubai Works manufactures angular contact ball bearings for pumps that operate in harsh environments. The company invested $2.4 million in a process that resulted in net profits of $760,000 per year for five consecutive years. What rate of return did the

> A start-up company that makes robotic hardware for CIM (computer integrated manufacturing) systems borrowed $1 million to expand its packaging and shipping facility. The contract required the company to repay the lender through an innovative mechanism ca

> A northern California consulting firm wants to start saving money for replacement of network servers. If the company invests $5000 at the end of year 1 but decreases the amount invested by 5% each year, how much will be available 5 years from now at an e

> Toselli Animation plans to offer its employees a salary enhancement package that has revenue sharing as its main component. Specifically, the company will set aside 1% of total sales revenue for year-end bonuses. The sales are expected to be $5 million t

> El Paso Water (EPW) purchases surface water for treatment and distribution to EPW customers from the County Water Improvement District during the irrigation season. A new contract between the two entities resulted in a reduction in future price increases

> A civil engineer planning for her retirement places 10% of her salary each year into a high-technology stock fund. If her salary this year (end of year 1) is $160,000 and she expects her salary to increase by 3% each year, what will be the future worth o

> Calculate the present worth of a geometric gradient series with a cash flow of $35,000 in year 1 and increases of 5% each year through year 6. The interest rate is 10% per year.

> How much money should a bank be willing to loan a real estate developer who will repay the loan by selling seven lakefront lots at $120,000 each 2 years from now? Assume the bank’s interest rate is 10% per year. Answer: P = 7(120,000)(P/F,10%,2) =

> Assume you were asked to prepare a table of compound interest factor values (like those in the back of this book) used in calculating the present worth of a geometric gradient series. Determine the two values for n = 1 and 2 for an interest rate of 10% p

> The future worth in year 10 of an arithmetic gradient cash flow series for years 1 through 10 is $500,000. If the gradient increase each year, G, is $3,000, determine the cash flow in year 1 at an interest rate of 10% per year.

> Tacozza Electric, which manufactures brush dc servo motors, budgeted $95,000 per year to pay for specific components over the next 5 years. If the company expects to spend $55,000 in year 1, how much of a uniform (arithmetic) increase each year is the co

> Bodine Electric, based in Des Moines, Iowa, USA, makes gear motors with a three-stage, selectively hardened gearing cluster that is permanently lubricated. If the company borrows $20 million for a new distribution facility in Europe, how much must it pay

> Apple Computer wants to have $2.1 billion available 5 years from now in order to finance initial production of a device that, based on your behavior, will learn how to monitor and control nearly all of the electronic devices in your home, such as thermos

> For the cash flows below determine the amount in year 1, if the annual worth in years 1 through 9 is $3500 and the interest rate is 10% per year. Year 1 2 3 4 5 6 7 8 9 Cost, A A+40 A+80 A+120 A+160 A+200 A+240 A+280 A+320 $1000

> A low-cost noncontact temperature measuring tool may be able to identify railroad car wheels that are in need of repair long before a costly structural failure occurs. If the BNF railroad saves $100,000 in year 1, $110,000 in year 2, and amounts increasi

> For the cash flow revenues shown below, find the value of G that makes the equivalent annual worth in years 1 through 7 equal to $500. The interest rate is 10% per year. Year Cash Flow, $ 0 1 2 3 200 200 + G 200+ 2G Year 4 5 6 7 Cash Flow, $ 200 + 3G

> Solar Hydro manufactures a revolutionary aeration system that combines coarse and fine bubble aeration components. This year (year 1) the cost for check valve components is $9,000. Based on closure of a new contract with a distributor in China and volume

> NMTeX Oil owns several gas wells in Carlsbad, NM. Revenue from the wells has been increasing according to an arithmetic gradient for the past 5 years. The revenue in year 1 from well no. 24 was $390,000 and it increased by $15,000 each year thereafter. D

> An arithmetic cash flow gradient series equals $500 in year 1, $600 in year 2, and amounts increasing by $100 per year through year 9. At i = 10% per year, determine the present worth of the cash flow series in year 0.

> Pressure Systems, Inc. manufactures high-accuracy liquid level transducers. It is investigating whether it should update in-place equipment now or wait and do it later. If the cost now is $200,000, what will be the equivalent amount 3 years from now at a

> A cash flow sequence starts in year 1 at $4000 and decreases by $300 each year through year 9. Determine (a) the value of the gradient G; (b) the amount of cash flow in year 5; and (c) the value of n for the (P∕G,i%,n) factor.

> A small oil company wants to replace its Micro Motion Coriolis flow meters with nickel-based steel alloy flow meters from the Emerson F-Series. The replacement process will cost the company $50,000 three years from now. How much money must the company se

> Determine the amount of money Frost Bank might loan a housing developer who will repay the loan 2 years from now by selling eight water-view lots at $240,000 each. Assume the bank’s interest rate is 10% per year.

> The cost of a fence that can detect poacher intrusion into a National Wildlife Preserve is $3 million per mile. If the effective life of the fence is 10 years, determine the equivalent annual cost of a 10-mile long fence at an interest rate of 8% per yea

> Syringe pumps oftentimes fail because reagents adhere to the ceramic piston and deteriorate the seal. Trident Chemical developed an integrated polymer dynamic seal that provides a higher sealing force on the sealing lip, resulting in extended seal life.

> The Public Service Board (PSB) awarded two contracts worth a combined $3.07 million to increase the depth of a retention basin and reconstruct a spillway that was severely damaged in a flood 2 years ago. The PSB president stated that, surprisingly, the b

> Durban Moving and Storage wants to have enough money available 5 years from now to purchase a new tractor-trailer. If the estimated cost is $250,000, how much should the company set aside each year if the funds earn 9% per year?

> The Department of Traffic Security of a city is considering the purchase of a new drone for aerial surveillance of traffic on its most congested streets. A similar purchase 4 years ago cost $1,200,000. At an interest rate of 7% per year, what is the equi

> American Gas Products manufactures a device called a Can-Emitor that empties the contents of old aerosol cans in 2 to 3 seconds. This eliminates the need to dispose of the cans as hazardous waste. If a paint manufacturing company can save $90,000 per yea

> China spends an estimated $100,000 per year on cloud seeding efforts which include using antiaircraft guns and rocket launchers to fill the sky with silver iodide. In the United States, utilities that run hydroelectric dams are among the most active clou

> Stanley, Inc. makes self-clinching fasteners for stainless steel applications. It expects to acquire new time-saving punching equipment 4 years from now. If the company sets aside $125,000 each year, determine the amount available in 4 years at an earnin

> Henry Mueller Supply Co. sells vibration control equipment for wind turbines exposed to harsh environmental factors. Annual cash flows for an 8-year period are shown in the table. Determine the future worth of the cash flows at an interest rate of 10% pe

> A new engineering graduate who started a consulting business borrowed money for 1 year to furnish the office. The amount of the loan was $45,800, and it had an interest rate of 10% per year. However, because the new graduate had not built up a credit his

> Loadstar Sensors is a company that makes load/ force sensors based on capacitive sensing technology. For a major plant expansion project, the company wants to have $30 million 5 years from now. If the company already has $15 million in an investment acco

> Labco Scientific sells high-purity chemicals to universities, research laboratories, and pharmaceutical companies. The company wants to invest in new equipment that will reduce shipping costs by better matching the size of the completed products with the

> Electric car maker Gentech signed a $75 million contract with Power Systems, Inc. to automate a major part of its assembly line system. If Power Systems will be paid 2 years from now, when the systems are ready, determine the present worth of the contrac

> A trusted friend told you that a cash flow sequence that started at $3000 in year 1 and increased by $2000 each year would be worth $15,000 in 12 years at a rate of return of 10% per year. Is she correct?

> A company that manufactures ultrasonic wind sensors invested $1.5 million 2 years ago to acquire part-ownership in an innovative chip-making company. How long will it take from the date of their initial investment for their share of the chip-making compa

> Demco Products, a company that manufactures stainless steel control valves, has a fund for equipment replacement that contains $500,000. The company plans to spend $85,000 each year on new equipment. (a) Estimate the number of years it will take to reduc

> How many years will it take for a uniform annual deposit of size A to accumulate to 10 times the size of a single deposit at a rate of return of 10% per year?

> Thompson Mechanical Products is planning to set aside $150,000 now for possible replacement of large synchronous refiner motors when it becomes necessary. If the replacement isn’t needed for 5 years, how much will the company have in its investment set-a

> RKE & Associates is considering the purchase of a building it currently leases for $30,000 per year. The owner of the building put it up for sale at a price of $170,000, but because the firm has been a good tenant, the owner offered to sell it to RKE for

> The business plan for KnowIt, LLC, a start-up company that manufactures portable multi-gas detectors, showed equivalent annual cash flows of $400,000 for the first 5 years. If the cash flow in year 1 was $320,000 and the constant increase thereafter was

> Which of the following 1-year investments has the highest rate of return: $12,500 that yields $1125 in interest, $56,000 that yields $6160 in interest, or $95,000 that yields $7600 in interest?

> A person’s credit score is important in determining the interest rate they have to pay on a home mortgage. According to Consumer Credit Counseling Service, a homeowner with a $100,000 mortgage and a 580 credit score will pay $90,325 more in interest char

> For a 5-year period, determine the compound interest rate per year that is equivalent to a simple interest rate of 15% per year.

> Parkhill, Smith, and Cooper, a consulting engineering firm, pays a bonus to each engineer at the end of the year based on the company’s profit for that year. If the company’s initial investment was$1.2 million, what rate of return has it made if each eng

> An A&E firm planning for a future expansion deposited $40,000 each year for 5 years into a sinking (investment) fund that was to pay an unknown rate of return. If the account had a total of $451,000 immediately after the fifth deposit, what rate of retur

> Your grandmother deposited $10,000 in an investment account on the day you were born to help pay the tuition when you go to college. If the account was worth $50,000 seventeen years after she made the deposit, what was the rate of return on the account?

> A large water utility is planning to upgrade its SCADA system for controlling well pumps, booster pumps, and disinfection equipment for centralized monitoring and control. Phase I will reduce labor and travel costs by $28,000 per year. Phase II will redu

> Centrum Water & Gas provides standby power to pumping stations using diesel-powered generators. An alternative is the use of natural gas to power the generators, but it will be a few years before the gas is available at remote sites. Centrum estimates th

> Pittsburgh Custom Products (PCP) purchased a new machine for ram cambering large I beams. PCP expects to bend 80 beams at $2000 per beam in each of the first 3 years, after which it expects to bend 100 beams per year at $2500 per beam through year 8. If

> Because unintended lane changes by distracted drivers are responsible for 43% of all highway fatalities, Ford Motor Co. and Volvo launched a program to jointly develop a technology to prevent accidents by sleepy or distracted drivers. A device costing $2

> Revenue from gas wells that have been in production for at least 5 years tends to follow a decreasing geometric gradient. One particular rights holder received royalties of $4000 per year for years 1 through 6; however, beginning in year 7, income decrea

> Callahan Construction borrowed $2.6 million to finance the construction of an entertainment complex in a smart community development project. The company made “interest only” payments of $312,000 each year for 3 years and then repaid the principal in a s

> The City of San Antonio is considering various options for providing water in its 50-year plan, including desalting. One brackish aquifer is expected to yield desalted water that will generate revenue of $4.1 million per year for the first 4 years, after

> For the cash flow diagram shown, determine the value of G that will make the present worth in year 0 equal to $2500 at an interest rate of 10% per year. 2 i = 10% per year 3 900 900-G 4 900-2G 5 Year 900-3G

> Prudential Realty has an escrow account for one of its property management clients that contains $20,000. How long will it take to deplete the account if the client withdraws $5000 now, $4500 one year from now, and amounts decreasing by $500 each year? A

> The pumping cost for delivering water from the Ohio River to Wheeling Steel for cooling hot rolled steel was $1.8 million for the first 4 years. An effective energy conservation program resulted in a reduced cost of $1.77 million in year 5, $1.74 million

> For the cash flows shown in the diagram, determine the equivalent uniform annual worth over years 1 through 5 at an interest rate of 10% per year. 0 2 i = 10% per year 500 3 450 4 400 5 350 Year

> Find the present worth at time 0 of the chrome plating costs shown in the cash flow diagram. Assume i = 10% per year. P= ? 0 2000 1 1800 2 1600 3 4 5 1400 1200 1000 Year

> Civil Engineering consulting firms that provide services to outlying communities are vulnerable to a number of factors that affect the financial condition of the communities, such as bond issues, real estate developments, etc. A small consulting firm ent

> Wrangler Western has some of its jeans stonewashed under a contract with an independent contractor, Almos Garment Corp. If Almos’ operating cost is $22,000 per year for years 1 and 2 and then it increases by 8% per year through year 10, what is the year-

> Dakota Hi-C Steel signed a contract that will generate revenue of $210,000 now, $226,800 in year 1, and amounts increasing by 8% per year through year 5. Calculate the future worth of the contract at an interest rate of 8% per year. Also, develop the FV

> Calculate the present worth of all costs for a newly acquired machine with an initial cost of $29,000, no trade-in value, a life of 10 years, and an annual operating cost of $13,000 for the first 4 years, increasing by 10% per year thereafter. Use an int

> RKI Instruments borrowed $4,800,000 from a private equity firm for expansion of its facility for manufacturing carbon monoxide monitors. The company repaid the loan after 1 year with a single payment of $5,184,000. What was the interest rate on the loan?

> A software company that installs systems for inventory control using RFID technology spent $600,000 per year for the past 3 years in developing their latest product. The company optimistically hopes to recover its investment in 5 years on a single contra

> Nippon Steel’s expenses for heating and cooling a large manufacturing facility are expected to increase according to an arithmetic gradient beginning in year 2. If the cost is $550,000 this year (year 0) and will be $550,000 again in year 1, but then are

> Industrial Electric Services has a contract with an Embassy in Mexico to provide maintenance for scanners and other devices in the building. What is the present worth of the contract (in year 0) if the company will receive a total of nine $12,000 payment

> For the cash flows shown, calculate the equivalent annual worth in years 1 through 4 at an interest rate of 10% per year. Year 0 1 2 3 4 Cash Flow, $ 250,000 275,000 300,000 325,000 375,000

> Silastic-LC-50 is a liquid silicon rubber designed to provide excellent clarity, superior mechanical properties, and short cycle time for high speed manufacturers. One high-volume manufacturer used it to achieve smooth release from molds. The company’s p

> Find the present worth in year 0 for the cash flows shown. Let i = 10% per year. 200 2 50 3 70 i = 10% 4 90 5 110 6 130 7 150 8 Year 170

> The following series of revenues and expenses in $1000 units were recorded by a mobile phone business. At a return rate of 10% per year, (a) Determine the net future worth in year 10. (b) Did the owners make their expected 10% return? How do you know?

> A construction management company is examining its cash flow requirements for the next 7 years. The company expects to replace software and infield computing equipment at various times over a 7-year planning period. Specifically, the company expects to s

> A recently hired CEO (chief executive officer) wants to reduce future production costs to improve the company’s earnings, thereby increasing the value of the company’s stock. The plan is to invest $70,000 now and $50,000 in each of the next 2 years to im

> Marcia observed the following cash flow series (in $1000 units) in an accounting report at work. The actual amounts in years 1 and 4 are missing; however, the report states that the present worth in year 0 was $300,000 at an interest rate of 10% per year

> In order to build a new warehouse facility, the regional distributor for Valco Multi-position Valves borrowed $1.6 million at 10% per year interest. If the company repaid the loan in a lump sum amount after 2 years, what was (a) the amount of the payment

> A company that manufactures air-operated drain valve assemblies currently has $85,000 available to pay for plastic components over a 5-year period. If the company spent only $42,000 in year 1, what uniform annual amount can the company spend in each of t

> A proximity sensor attached to the tip of an endoscope could reduce risks during eye surgery by alerting surgeons to the location of critical retinal tissue. If an eye surgeon expects that by using this technology he may avoid lawsuits of $0.6 and $1.35

> Find the present worth for the following cash flow series (in $1000 units). i = 6% per year 100 2 3 لها 4 200 200 5 6 7 8 Year 90 90 90 90

> For the cash flows shown in the diagram, determine the value of x and 2x that will make the future worth in year 8 equal to $100,000. i = 10% per year

> For the cash flows shown, calculate the future worth in year 8 at i = 10% per year. Year Cash Flow, $ 1 2 500 500 500 0 005 | 3 3 4 5 6 0 7 008 008 008 008

> For the cash flows shown, calculate the future worth in year 9 using i = 10% per year. Year 0 1 2 3 4 5 6 Cash Flow, $ 200 200 200 200 300 300 300