Quiz 3a

# Quiz 3a - MSE 304 Engineering Economy Quiz 3 Show equations...

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MSE 304 – Engineering Economy Quiz 3 Show equations used and all calculations. 1. Proposals from three shipping freighter companies are listed below. Determine which company proposal has the lowest cost on the basis of an annual worth comparison at 12% per year. DSX FDX UPS First cost -\$110,000 -\$800,000 0 Annual cost, /year -\$95,000 -\$60,000 -\$190,000 Salvage value \$15,000 \$250,000 0 Life, years 3 6 2 Answer: A DSX = -110,000 (A/P , 12%, 3) – 95,000 + 15,000 (A/F, 12%, 3) = -110,000 (0.41635) – 95,000 + 15,000 (0.29635) = -45,798.50 – 95,000 + 4445.25 A DSX = -136,353.25 A FDX = -800,000 (A/P , 12%, 6) – 60,000 + 250,000 (A/F, 12%, 6) = -800,000 (0.24323) – 60,000 + 250,000 (0.12323) = -194,584 – 60,000 + 30,807.50 A FDX = -223,776.50 A UPS = -190,000 DSX has the lowest cost.

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MSE 304 – Engineering Economy Quiz 3 2. NCX is considering two processes for making polymers. Process A will have a first cost of \$100,000 and an annual operating cost of \$60,000. Process B will have a first cost of \$165,000. If both processes will be effective for 4 years and the rate of return on the increment between the alternatives is 25%, what are the annual operating costs for process
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