Homework Set No. 10 (Eng Econ Anal) 1. Two possible routes for a power line are under study. Data on the routes are as follows: Around Under the lake the lake Length 15 km 5 km First Cost $5000/km $25,000/km Maintenance $200/km/yr $400/km/yr Useful life, yr 15 15 Salvage Value $3000/km $5000/km Yearly power loss $500/km $500/km Annual Property Taxes 2% of 1st cost 2% of 1st cost If 7% interest is used, should the power line be routed around the lake or under the lake? Use the annualized cash flow approach. 2. An industrial firm desires an economic analysis to determine which of two different machines should be purchased. Each machine is capable of performing the same task in a given amount of time. Assume annual interest is 8%. The data are as follows: A B First Cost $5000 $8000 Estimated life, yr 5 12 Salvage value 0 $2000 Annual maint cost 0 $150 Which machine would you choose? Base your answer on annualized cost. 3. A person buys a corporate bond from a bond brokerage house for $925. The bond has a face value of
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This note was uploaded on 05/02/2011 for the course MAE 412 taught by Professor Terry during the Spring '08 term at N.C. State.