Engineering Economics

Use this for “A $30,000 loan at 7% is repaid in 8 equal yearly payments. How much is each payment?”, or what a series of payments is worth today.

Use this for “$1,500 is deposited at the end of each year for 10 years at 5%. How much is there at the end?”, or the deposit a sinking fund needs.

Use this for “Maintenance costs $3,000 in year 1 and rises $400 a year. At 8%, what are 10 years of it worth today?”

Use this for “A loan charges 9% a year compounded monthly. What is the effective annual rate, and what would it be compounded continuously?”

Use this for “A $45,000 machine costs $6,000 a year to run and sells for $5,000 after 8 years. At 10%, what is its EUAC?”

Use this for “A $2,000,000 bridge costs $40,000 a year to keep up and $150,000 to resurface every 10 years. At 5%, what is its capitalized cost?”

Use this for “Machine A costs $30,000, $8,000 a year and sells for $4,000; B costs $42,000, $5,000 a year and sells for $6,000. Both last 6 years. At 12%, which is cheaper?”

Use this for “A highway saves users $900,000 a year, with $150,000 a year of disbenefits. It costs $5,000,000 plus $120,000 a year O&M. At 6% over 20 years, find B/C.”

Use this for “Plan 1: PW of benefits $4,200,000, of costs $3,000,000. Plan 2: $5,600,000 and $4,500,000. Which plan do you choose by incremental B/C?”

Use this for “An $84,000 machine is 7-year MACRS property. Its year-3 rate is 17.49%, and 56.27% to date. What are D₃ and BV₃?”

Use this for “A machine brings in $30,000 a year before tax and is depreciated $12,000 this year. At a 21% tax rate, what is the after-tax cash flow?”

Use this for “An $84,000 machine is depreciated by double declining balance over 7 years. What are its depreciation and book value in year 3?”

Use this for “A $40,000 machine loses 20% of its market value a year and costs $5,000 to run, rising $1,500 a year. At 10%, which life costs least?”

Use this for “A product has $120,000 a year of fixed cost, $30 a unit of variable cost and sells for $45. Find its break-even quantity and the profit at 10,000 units.”