$\alpha-\beta,$ Inc., a high-tech company in San Diego, whose stock trades on the NYSE exchange, uses a MARR of 25% per year. If the chief financial officer (CFO) said the company expects to make a real rate of return of 20% per year on its investments over the next 3-year period, what is the company expecting the annual inflation rate to be over that time period?

Kaitlin knows that if she needs to add antifreeze to her car’s radiator the mixture used must contain 50% antifreeze and 50% water. How many gallons of a mixture containing 80% antifreeze must be added to a 3-gallon mixture containing 40% antifreeze to obtain the mixture Kaitlin needs?

A presently owned machine has the projected market value and M&O costs shown below. An outside vendor of services has offered to provide the service of the existing machine at a fixed price per year. If the presently owned machine is replaced now, the cost of the fixed-price contract will be $33,000 per year. If the presently owned machine is replaced next year or any time after that, the contract price will be$35,000 per year. Determine if and when the defender should be replaced with the outside vendor using an interest rate of 10% per year. Assume used equipment similar to the defender will always be available, but that the current equipment will not be retained more than three additional years. $$ \begin{array}{ccc} \text{ } & \text{ } & \text{M&O Cost,}\\ \text{Retention Year} & \text{Market Value, \$} & \text{\$ per Year}\\ \hline \text{0} & \text{$32,000$} & \text{-}\\ \text{1} & \text{$25,000$} & \text{$24,000$}\\ \text{2} & \text{$14,000$} & \text{$25,000$}\\ \text{3} & \text{$10,000$} & \text{$26,000$}\\ \text{4} & \text{$8,000$} & \text{-}\\ \hline \end{array} $$

A UK-based life insurance company will pay a cash-value sum of $\pounds 500000$ when the insured reaches the age of 65. The insured will be 65 years old 27 years from today. (a) Determine the cash value of the $\pounds 500,000$ in CV purchasing power, assuming inflation remains constant at 3% per year. (b) Write the spreadsheet single-cell function that displays the answer. (c) Convert your answer to U.S. dollars and euros using current exchange rates.

An engineer who is now 65 years old began planning for retirement 40 years ago. At that time, he thought that if he had $1 million when he retired, he would have more than enough money to live his remaining life in luxury. Assume the inflation rate over the 40-year time period averaged a constant 4% per year. (a) What is the CV purchasing power of his$1 million at age 65? (Hint: Use the day he started 40 years ago as the base year. (b) How many future dollars should he have accumulated over the 40 years to have a CV purchasing power equal to $1 million at his current age of 65?

The plant manager has asked you to do a cost analysis to determine when currently owned equipment should be replaced. The manager stated that under no circumstances will the existing equipment be retained longer than two more years and that once it is replaced, a contractor will provide the same service from then on at a cost of $97,000 per year. The salvage value of the currently owned equipment is estimated to be$37,000 now, $30,000 in 1 year, and$19,000 two years from now. The operating cost is expected to be $85,000 per year. Using an interest rate of 10% per year, determine when the defending equipment should be retired.

A presently owned machine has the projected market value and M&O costs shown below. At an interest rate of 10% per year, the AW for keeping the machine 2 more years is closest to: (a) $29,650 (b)$32,840 (c) $35,770 (d)$39,720 $$ \begin{array}{ccc} \text { Year } & \text { Market Value, } \$ & \text { M&O cost, } \$ \\ \hline 0 & 32,000 & - \\ 1 & 25,000 & 24,000 \\ 2 & 14,000 & 24,000 \\ 3 & 10,000 & 26,000 \\ 4 & 8,000 & 29,000 \\ \hline \end{array} $$

A piece of equipment has a first cost of $150,000, a maximum useful life of 7 years, and a market (salvage) value described by the relation S = 120,000 - 20,000k, where k is the number of years since it was purchased. The salvage value cannot go below zero. The AOC series is estimated using AOC = 60,000 + 10,000k. The interest rate is 15% per year. Determine the economic service life ( a) by hand solution, using regular AW computations, and ( b) by spreadsheet, using annual marginal cost estimates.

Monthly maintenance costs, MC, for conveyor belts in an airport’s centralized baggage collection and distribution facility are clustered into cell midpoints with associated frequencies as shown. (a) Estimate the expected value and standard deviation of MC based on this sample. (b) What is the best estimate of the percentage of MC that will fall within $\pm 1$ standard deviation of the mean?

$$\begin{array}{cc} \text { cost MC, \$ } & \text { Frequency } \\ \hline 200 & 4 \\ 400 & 8 \\ 600 & 9 \\ 800 & 14 \\ 1000 & 18 \\ 1200 & 25 \\ 1400 & 12 \\ 1600 & 10 \\ \hline \end{array}$$

A piece of onboard equipment has a first cost of $600,000, an annual cost of$92,000, and a salvage value that decreases to zero by $150,000 each year of the equipment’s maximum useful life of 5 years. Assume the company’s MARR is 10% per year. (a) Determine the ESL by hand. (b) Use a spreadsheet with a graph indicating the capital recovery, AOC, and total AW per year to determine the ESL.

The federal-level Pell Grant program provides financial aid to needy college students. The grant increases annually to account for inflation. The maximum total Pell Grant award increased from $5550 to$5,730 from 2013 to 2015. (a) What was the average inflation rate per year in this prior 2-year period? (b) Beginning in 2018, grants will no longer increase with inflation. What will be the maximum award starting in 2018 and thereafter assuming the inflation rate in 2016 and 2017 is 2.5% per year?

Determine today’s purchasing power of $1,000,000 thirty years in the future, if$i_{f}=15 %$ per year and f = 5% per year.

If a 3D printer increased in cost at exactly the inflation rate, what was the inflation rate if the printer costs exactly twice as much now as it did 10 years ago?

According to NACE’s April 2014 Salary Survey, engineering majors held 8 of the top 10 spots on the list of top-paid majors for the Class of 2014 bachelor’s degree graduates. Graduates in petroleum engineering were the highest paid at $93,500, earning$28,000 more than the next highest paid at $67,300. Civil engineering graduates were the tenth highest paid at$62,100. Assuming the starting salary of petroleum engineering graduates stays the same for the next 10 years, what annual increase in pay would be required for civil engineering graduates to receive the same starting salary as that of petroleum engineering graduates?