Exam 1 v2.A BE 2326 Engineering Economy You are Chief Engineer and Lead Decision

Question

Exam 1 v2.A BE 2326 Engineering Economy You are Chief Engineer and Lead Decision Maker for the Biomedical Research and Development Division at Cureall. You know the following information: Interest is expected to be 10% per year unless stated otherwise Cureall's MARR is 30% * * Time 13 weeks in a quarter, 52 weeks in a year, 4 quarters in a year, 3 months per quarter . Salary Average salary cost at Cureall is $85 per hour (including benefits) . Cureall's Revenue over the past 8 years totals to a present worth of $1.3B USD Profits have been reinvested and earned a return of 10% An aggie employee confused the shredder for a copier and so the Sth year's revenue data was lost. The following is all that remains: . . Cureall's Revenue Chart year $160 $120 $80 $40 Taxation Cureall's effective tax rate is 38% * tal I Your financial options from banks willing to speak with you are as follows: o Giant Nationalized Bank: 10% per year, compounded quarterly o Bank of the One Percent: 12% per year, compounded monthly . o Lendit & Takenrun: 10.5% per month, compounded semi-annually Bailout Banking Corp: 5% per month, compounded quarterly Loan origination charges and fees for all the above are estimated at $3K Exam 1 1 of 3 BE 2326

Explanation / Answer

Answer for question no.1:

Present worth of annual operating costs of Suretofixl is as follows:

Answer for question no.2:

Operating costs of Urbetterall is as follows:

Answer for question no.3:

Answer for question no.4:

Year Operating costs(A) Cost of capital for Suretofix 7.2% (B) Present worth =A*B 1 $50.00 0.932835821 $46.64 2 $50.00 0.870182669 $43.51 3 $100.00 0.811737564 $81.17 4 $150.00 0.757217877 $113.58 5 $350.00 0.70635996 $247.23 6 $250.00 0.658917873 $164.73 7 $300.00 0.614662195 $184.40 8 $350.00 0.573378913 $200.68 Total $1,081.94

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