TCM551-651 Homework 1 (Ch. 1) Name: Solutions
Multiple Choice 1: Highlight in yellow the correct answer.
Engineering economic analysis can be described by the following statement(s):<1 pt>
(a) Involves a systematic analysis of relevant costs and benets.
(

SP 15 TCM551-651
w/ Dr. Jones Homework 6 (Ch. 6) Name: Solutions
6-25: Fieldsprings city manager of public works has been reviewing flood data for his city and has
determined a certain pattern to the associated costs. He wishes to start a perpetual fund f

SP 15 TCM551-651
w/ Dr. Jones Homework 4 (Ch. 4) Name: Solutions
4-29: What amount will be required to purchase, on an engineers 40th birthday, an annuity to provide him
with 25 equal semiannual payments of $10,000 each, the rst to be received on his 60th

SP 16 TCM551-651
w/ Dr. Jones Homework 7 (Ch. 7) Name: Solutions
7-36: On April 2, 1998, Gigolo Airline issued some bonds that could be bought for $4,500. The purchaser
would not get any interest payments but these bonds will be worth $11,500 on April 2,

SP 15 TCM551-651
w/ Dr. Jones Homework 2 (Ch. 2)
Name: Solutions
2-3: A new machine comes with 200 free service hours over the rst year. Additional time costs $150 per
hour. What are the average and marginal costs per hour for the following quantities?
(a

SP 16 TCM551-651 w/ Dr. Jones Homework 6 (Ch. 6) Name: Solutions
Score:
/50
6-25
Ivanna Muny, MSU-educated technologist, has made a considerable fortune. She wishes to start a
perpetual scholarship for technology students at Missouri State. The scholarshi

SP 15 TCM551-651
w/ Dr. Jones Homework 3 (Ch. 3) Name: Solutions
3-16: We know that a certain piece of equipment will cost $150,000 in 5 years. How much must be
deposited today using 10% interest to pay for it? <5 pts>
Answer: $93,138 or $93,135
Reasoning

SP 17 TCM551-651
w/ Dr. Jones Homework 6 (Ch. 6) Name: Solutions
6-25: Fieldsprings city manager of public works has been reviewing flood data for his city and has
determined a certain pattern to the associated costs. He wishes to start a perpetual fund f

SP 17 TCM551-651
w/ Dr. Jones Homework 4 (Ch. 4) Name: Solutions
4-29: What amount will be required to purchase, on an engineers 40th birthday, an annuity to provide him
with 25 equal semiannual payments of $10,000 each, the rst to be received on his 60th

SP 17 TCM551-651
w/ Dr. Jones Homework 7 (Ch. 7) Name: Solutions
7-36: On April 2, 1998, Gigolo Airline issued some bonds that could be bought for $4,500. The purchaser
would not get any interest payments but these bonds will be worth $11,500 on April 2,

2-3: A new machine comes with 200 free service hours over the rst year. Additional time costs $150 per
hour. What are the average and marginal costs per hour for the following quantities?
(a) 125
<2 pts>
Answer: 125 hours < 200 hours, no additional cost a

SP 15 TCM551-651
w/ Dr. Jones
Homework 10 (Ch. 10)
Name: Solutions
10-5: The Center for Disease Control is considering the development of a vaccine. The upfront cost is $112.5
million, but it will decrease the sick days of American workers. The projected

SP 15 TCM551-651
w/ Dr. Jones
Homework 9 (Ch. 9)
Name: Solutions
9-23: To attract world-class post-docs, Kronos Labs wants to establish a research fund that will provide
$25,000/year for 15 years beginning at some future date. Kronos has $34,250 now it ca

SP 15 TCM551-651
w/ Dr. Jones Homework 8 (Ch. 8)
Name: Solutions
8-7: A ceramic engineer must choose between two models of kilns as shown below.
Model
Catalog Price
Yearly Fuel Consumption
Yearly Benefit
Salvage Value
Years of Life
TCM551
$10,000
$2,250
$

SP 16 TCM551-651
w/ Dr. Jones
Homework 5 (Ch. 5) Name: Solutions
5-31: Telfono Mexico is expanding its facilities to serve a new manufacturing plant. The new plant will
require 2000 telephone lines this year, and another 2000 lines after expansion in 10 y

SP 16 TCM551-651 w/ Dr. Jones Homework 3 (Ch. 3) Name: First Last Score:
Solutions
/50
3-6:
How long would it take to triple your money if you invest it at 3% simple interest? <6 pts>
Answer:
Reasoning/Work:
Need to have F = 3P, so F = P(1+in) becomes 3P

SP 16 TCM551-651 w/ Dr. Jones Homework 2 (Ch. 2) Name: Solutions Score:
/50
2-3:
A new machine comes with 100 free service hours over the first year. Additional time costs $75 per hour.
What are the average and marginal costs per hour for the following qu

SP 16 TCM551-651 w/ Dr. Jones Homework 1 (Ch. 1) Name: Solutions Score:
/50
Question 1: Engineering economic analysis provides useful input in all of the following situations except
which one?<1 pt>
o Determining how much we should pay for a machine that