me3232-F10-hw4 - ME 3232 Homework #4, due 10/13/10 1. Jones...

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ME 3232 Homework #4, due 10/13/10 1. Jones Construction Company needs a temporary office building at a construction site. Two types of heating schemes are being considered. The first method is to use “bottled gas” for floor-type furnaces. The second is to install electric radiant panels in the walls and ceiling. The temporary building will be used for 5 years before being dismantled. Bottled Gas Electric Panels Investment cost Service life Salvage value Extra expenses for income taxes $6000 5 years 0 $2000 $8500 5 years $1000 $1000 $ 220 Compare the alternatives based on the present equivalent criterion at i = 10%. 2. Travis Wenzel has $2000 to invest. Normally, he would deposit the money in his savings account, which earns 6% interest, compounded monthly. However, he is considering three alternative investment opportunities: Option 1: Purchasing a bond for $2000. The bond has a face value of $2000 and pays $100 every 6 months for 3 years. The bond matures in 3 years. Option 2:
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This note was uploaded on 11/19/2010 for the course ME 3232 taught by Professor Lyon during the Fall '10 term at University of New Brunswick.

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me3232-F10-hw4 - ME 3232 Homework #4, due 10/13/10 1. Jones...

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