EGR 312 – Lesson 11 – Solution Set
5.7 PWIn-house = -30 + (14 – 5)(P/A,10%,5) + 2(P/F,10%,5)
= -30 + (14 – 5)(3.7908) + 2(0.6209)
= $5.359 ($5,359,000)
PWContract = (3.1 – 2)(P/A,10%,5)
= (3.1 – 2)(3.7908)
= $4.170 ($4,170,000)
Select In-house production.
5.10 Find Pg for each stock and select higher one.
PgA = 30,000{1 – [(1 + 0.06)/(1 + 0.08)]5}/(0.08 – 0.06)
= $133,839
PgB = 20,000{1 – [(1 + 0.12)/(1 + 0.08)]5}/(0.08 – 0.12)
= $99,710
Select Class A stock
5.12 PWNo drains = -1500(P/A,4%,12)
= -1500(9.3851)
= $-14,078
PWCorrugated = -3(7000) +4000(P/F,4%,12)
= -21,000 +4000(0.6246)
= $-18,502
Do not install corrugated pipe
5.19 (a) PWX = -250,000 – 60,000(P/A,10%,6) - 180,000(P/F,10%,3) + 70,000(P/F,10%,6)
= -250,000 – 60,000(4.3553) - 180,000(0.7513) + 70,000(0.5645)
= $-607,037
PWY = -430,000 – 40,000(P/A,10%,6) + 95,000(P/F,10%,6)
= -430,000 – 40,000(4.3553) + 95,000(0.5645)
= $-550,585
Select Machine Y
5.21 PW1 = -26,000 – 5000(P/A,10%,6) - 26,000(P/F,10%,3)
= -26,000 – 5000(4.3553) - 26,000(0.7513)
= $-67,310
PW2 = -83,000 – 1400(P/A,10%,6) - 2500(P/F,10%,3)
= -83,000 – 1400(4.3553) - 2500(0.7513)
= $-90,976
Select Plan 1
5.24 (a) PWLand = -130,000 – 95,000(P/A,10%,6) – 105,000(P/F,10%,3) + 25,000(P/F,10%,6)
= -130,000 – 95,000(4.3553) – 105,000(0.7513) + 25,000(0.5645)
= $-608,528
PWIncin = -900,000 – 60,000(P/A,10%,6) + 300,000(P/F,10%,6)
= -900,000 – 60,000(4.3553) + 300,000(0.5645)
= $-991,968
PWContract = –120,000(P/A,10%,6)
= –120,000(4.3553)
= $-522,636
Select private disposal contract
(b) Recalculate PW for the contract alternative with 20% increases each 2 years.
PWContract = -120,000(P/A,10%,2) - 120,000(1.20)(P/A,10%,2)(P/F,10%,2)
- 120,000(1.2)2(P/A,10%,2)(P/F,10%,4)
= -120,000(1.7355) - 144,000(1.7355)(0.8264) - 172,800(1.7355)(0.6830)
= $-619,615
Select land application; the selection changed
5.26 FWX = -80,000(F/P,15%,3) – 30,000(F/A,15%,3) + 40,000
= -80,000(1.5209) – 30,000(3.4725) + 40,000
= $-185,847
FWY = -97,000(F/P,15%,3) – 27,000(F/A,15%,3) + 50,000
= -97,000(1.5209) – 27,000(3.4725) + 50,000
= $-191,285
Select robot X
5.31 CC = (-100,000/0.08)(P/F,8%,5)
= -1,250,000(0.6806)
= $-850,750
5.33 CC = -300,000 – 35,000/0.12 – 75,000(A/F,12%,5)/0.12
= -300,000 – 291,667 – 75,000(0.15741)/0.12
= $-690,048
5.36 CC = -1000/0.10 – 5000(A/F,10%,4)/0.10
= -1000/0.10 – 5000(0.21547)/0.10
= $-20,774