Engineering Economy

Engineering Economy

Extra Credit assignment. – Up to 8 points.
Create a worksheet with 3 problems that will help future students prepare for Quiz 4. Specific requirements for
the problems are given below.
All problems created for the worksheet must be original to the student. (It is OK to use textbooks or the internet
to give you guidance to create problems, but objective evidence of plagiarism will result in penalties as stated on
the syllabus.)

Engineering Economy
Turn in the following to the assignment dropbox:
1. Your worksheet as a Word document. (3 pages, one problem per page)
2. PDF copy of worksheet complete with solutions for problems 1 and 3 which require solving with use of
factors. Solutions must be written by hand.
3. Excel file with problems 2 and 3. Each problem on its own sheet in the excel file. (If you decide to do #2
by hand rather than excel, include solution in the pdf instead.)
To get all 8 points:

•  Worksheet must Include original problems that contain all information required to complete. Correct solutions provided in formats specified
  Create problems as follows:
  1. Prepaid expense and nominal rates – work with factors, show cash flow diagram
• Create somewhat realistic scenario
• Select timeframe from 3 to 6 years
• Give nominal rate and compounding period within the year
• Include a first cost and prepaid expense.
• May include some sort of income/savings
• Use MARR between 6 and 15%.
• Determine PW and FW

Engineering Economy

2. Three alternatives – Rate of return on incremental investment – May work by hand or with excel.

• First costs for alternatives A, B, C:
  A. Take the last 4 digits of your Panther Id, and put 11 in front of it. (Example, if the last four
  digits of your PID are 3456, then your First cost for A is 113,456.)
  B. Take cost from A and subtract 3000. (Continuing example: 113,456 – 3000 = 110,456 = first
  cost for B)
  C. Take first cost from A and add 20,000 (Continuing example: 113,345 +20,000 = 123,456 =
  first cost for C)
• Annual savings for each alternative: Take the first 3 digits of your Panther Id, and put 11 in front of it.
  Let’s call this number Y. (Example, if the first 3 digits of your PID are 789, then Y = 11,789.
  A. Multiply Y by 4
  B. Multiply Y by 3
  C. Multiply Y by 5
• In worksheet, create table to provide first costs and annual savings..
• Assume 4 year life and no salvage value. MARR is equal to 12%.
• Determine best option based on incremental rate of return.
• Annotate work by hand or the excel worksheet so it is clear what is being analyzed and what decision
  is made at each step of analysis
• No need to create a scenario.
  3. EAC at optimal economic life – work both with factors and with excel
• Create somewhat realistic scenario
• Evaluate over 6 years
• Select a first cost
• Determine Salvage values which decrease each year
• Include maintenance costs that start 3 % of your first cost, then increase each year with an arithmetic
  gradient.
• Use an MARR between 8 and 12 %
• Determine EAC if kept through each number of years 1-6.
• Identify optimal economic life

By admin in Essays on October 17, 2016