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Fundamentals of Engineering Economics 3rd Edition by Chan Park
Edition 3ISBN: 978-0132775427Fundamentals of Engineering Economics 3rd Edition by Chan Park
Edition 3ISBN: 978-0132775427 Exercise 1
A machine costing $25,000 to buy and $3,000 per year to operate will save mainly labor expenses in packaging over six years. The anticipated salvage value of the machine at the end of six years is $5,000.
(a) If a 10% return on investment (rate of return) is desired, what is the minimum required annual savings in labor from this machine?
(b) If the service life is five years instead of six years, what is the minimum required annual savings in labor for the firm to realize a 10% return on investment?
(c) If the annual operating cost increases 10%, say, from $3,000 to $3,300, what will happen to the answer to (a)?
(a) If a 10% return on investment (rate of return) is desired, what is the minimum required annual savings in labor from this machine?
(b) If the service life is five years instead of six years, what is the minimum required annual savings in labor for the firm to realize a 10% return on investment?
(c) If the annual operating cost increases 10%, say, from $3,000 to $3,300, what will happen to the answer to (a)?
Explanation
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Given information:
• Machine cost is $2...
Fundamentals of Engineering Economics 3rd Edition by Chan Park
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