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Engr 315 - Engineering Economics: Problem 1 Problem 2

This document contains two engineering economics problems. The first problem asks which machine, A or B, a business should purchase given their costs and repair schedules. Machine A costs $36,500 while Machine B costs $36,300, but they have different repair schedules. The second problem asks how much cash will be needed at the end of 1982 to purchase a new $10,000 machine to replace an existing one, taking into account salvage value of $750 for the old machine and interest-earning deposits made in 1979 and 1981.

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Gelvie Lagos
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152 views1 page

Engr 315 - Engineering Economics: Problem 1 Problem 2

This document contains two engineering economics problems. The first problem asks which machine, A or B, a business should purchase given their costs and repair schedules. Machine A costs $36,500 while Machine B costs $36,300, but they have different repair schedules. The second problem asks how much cash will be needed at the end of 1982 to purchase a new $10,000 machine to replace an existing one, taking into account salvage value of $750 for the old machine and interest-earning deposits made in 1979 and 1981.

Uploaded by

Gelvie Lagos
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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ENGR 315 ENGINEERING ECONOMICS ACTIVITY 1

PROBLEM 1 PROBLEM 2

A business firm contemplating the installation of labor A manufacturing firm contemplates retiring an existing
saving machinery has a choice between two different machine at the end of 1982. The new machine to
models. Machine A will cost P36,500, while Machine B replace the existing one will have an estimated cost of
will cost P36,300. The repairs required for each machine P10,000. This expense will be partially defrayed by sale
are as follows. of old machine as scrap for P750. To accumulate the
Machine A: P1,500 at the end of the 5th year balance of the required capital, the firm will deposit the
P2,000 at the end of 10th year following sums in an account earning interest at 5%
Machine B: P3,800 at the end of the 9th year compounded annually.
The machines are alike in all other aspects. If this firm is P1,500 at the end of 1979
earning 7% return on its capital, which machine should P2,000 at the end of 1981
be purchase? And what is the net savings? What cash disbursement will be necessary at the end of
1982 to purchase the new machine?

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