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Tut 3

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6 views

Tut 3

Uploaded by

Rao Bilal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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B. Tech.

(Civil) VII Semester (2024)


C.E. 704 Engineering Economics & Construction Management
Tutorial No 3
Use of Multiple Factors
Source: Engineering Economy by Leland T. Blank, Anthony J. Tarquin, McGraw-Hill Book Company, New Delhi.

1 Find the present worth for the following cash flow series (in $1000 units)

2 A company that manufactures air-operated drain valve assemblies currently has $85,000 available
to pay for plastic components over a 5-year period. If the company spent only $42,000 in year 1,
what uniform annual amount can the company spend in each of the next 4 years to deplete the
entire budget? Let i = 10% per year.
3 Silastic-LC-50 is a liquid silicon rubber designed to provide excellent clarity, superior
mechanical properties, and short cycle time for high speed manufacturers. One high-volume
manufacturer used it to achieve smooth release from molds. The company’s projected growth will
result in silicon costs of $26,000 in years 1 and 2, with costs increasing by $2000 per year in years
3 through 5. At an interest rate of 10% per year, what is the present worth of these costs?
4 Solar Hydro manufactures a revolutionary aeration system that combines coarse and fine bubble
aeration components. This year (year 1) the cost for check valve components is $9,000. Based on
closure of a new contract with a distributor in China and volume discounts, the company expects
this cost to decrease. If the cost in year 2 and each year thereafter decreases by $560, what is the
equivalent annual cost for a 5-year period at an interest rate of 10% per year?
5 For the cash flows shown in the diagram, determine the equivalent uniform annual worth over
years 1 through 5 at an interest rate of 10% per year

6 The pumping cost for delivering water from the Ohio River to Wheeling Steel for cooling hot
rolled steel was $1.8 million for the first 4 years. An effective energy conservation program
resulted in a reduced cost of $1.77 million in year 5, $1.74 million in year 6, and amounts
decreasing by $30,000 each year through year 10. What is the present worth of the pumping costs
in year 0 at an interest rate of 12% per year ?

Source: Engineering Economy by Leland T. Blank, Anthony J. Tarquin, McGraw-Hill Book Company, New Delhi.

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