ass4 - Carleton University Department of Civil and...

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Carleton University Department of Civil and Environmental Engineering ECOR3800B Engineering Economics ASSIGNMENT 4 Due Date: Thursday April 1, 2010, 12:00 Noon L ocation : Filing cabinet near the entrance to the Civil & Environmental Wing of Mackenzie Engineering Building 1. Consider the following two alternatives: Alternative 1 Alternative 2 First cost Annual expense Annual income Salvage value Estimated service life $16,000 $3,000 $11,000 $0 4 years $20,000 $5,000 $11,500 $4,000 8 years Suppose that the salvage value of Alternative 2 is known with certainty, but the salvage value for Alternative 1 is subject to variation. However, on the basis of the above given data, what is your choice? MARR is = 8%. 2. In question 1, by how much should the salvage value for Alternative 1 vary so that the initial decision based on the data shown above would be reversed? That is, how much change should occur in the salvage of Alternative 1 so that the choice resulting from analysis in question 1 will be reversed? The MARR = 8 percent. 3. The revenue and costs functions (in thousands of dollars) are noted below. Assume that the company can sell all units produced. Revenue R = 3n/4 Cost C = (n 3 8n 2 +25n + 30)/25 (a) Find break-even point or points and construct a graph of the cost and revenue curves with the break-even point(s) shown.
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