IE343_HW5_Solutions

# IE343_HW5_Solutions - Homework Assignment #5 Solutions...

This preview shows pages 1–3. Sign up to view the full content.

Homework Assignment #5 Solutions IE 343 – Homework Assignment #5 Solutions – Page 1 PURDUE UNIVERSITY Homework Assignment #5 IE 343: Engineering Economics Assigned: 24 Sept 2010 Fall 2010 Due: 01 Oct 2010 Instructor: A. Capponi Missing name on the top of each page submitted – 2 Not stapled together – 2 Not completed on the correct template – 10 Problem 1 (15 points) Consider a machine that cost \$15,000 and has a 5 year useful life. At the end of 5 years, it can be sold for \$3,500. The machine increases the profit for the firm by \$4,000 per year. (a) Draw cash flow diagram 3,500 \$4,000 \$4,000 \$4,000 \$4,000 \$4,000 0 1 2 3 4 5 \$15,000 (b) Should the machine be purchased if the MARR is 10% per year and the annual worth method is used? We have CR(0.1) = \$15,000 (A/P, 0.1,5) - \$3,500 (A/F, 0.1, 5) = \$3,957-\$573.3 = \$3,384. Thus, we get that the annual worth is AW(0.1) = \$4,000 - \$3,384 = \$616 > 0. Since AW(0.1) >0, we can conclude that buying the machine is a worthwhile investment.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Homework Assignment #5 Solutions IE 343 – Homework Assignment #5 Solutions – Page 2 Problem 2 ( 15 points ) The heat loss through the exterior walls of a processing plant is estimated to cost the owner
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 09/19/2011 for the course IE 343 taught by Professor Vincent,g during the Spring '08 term at Purdue.

### Page1 / 4

IE343_HW5_Solutions - Homework Assignment #5 Solutions...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online