Asked on 8 Aug 2018

1.

A research engineer invests $5,000 at the end of every year for a 32-year career. If this teacher wants to have $1,524,240 in savings at retirement, what interest rate must the investment earn?

2.

Consider the following two mutually exclusive alternatives (do not consider the “Do Nothing” alternative). Each alternative has a 10-year useful life and no salvage value. If the MARR is 12%, which alternative should be selected? Answer in terms of incremental rate of return analysis

Cash Flow A B B – A

Initial cost (–$6,000) (–$9,000) (–$3,000)

EUAB $1,000 $1,500 $ 500

3.

An engineer has a fluctuating future budget for the maintenance of a particular machine. During each of the first 5 years, $1000 per year will be budgeted. During the second 5 years, the annual budget will be $1500 per year. In addition, $3500 will be budgeted for an overhaul of the machine at the end of the fourth year, and again at the end of the eighth year. What uniform annual expenditure (cost) would be equivalent, if interest is 9% per year?

Answered on 8 Aug 2018

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