In order to improve evacuation routes out of New Orleans in the event of another major disaster such as Hurricane Katrina, the Louisiana. Department of Transportation (L-DoT) is planning to construct an additional bridge across the Mississippi River. The department uses an interest rate of 8% and plans a 50-year life for either bridge. Which design has the better present worth? $$ \begin{matrix} \text{All Costs in \$M} & \text{Suspension Bridge} & \text{Cantilever Bridge}\\ \text{Initial construction} & \text{\$585} & \text{\$470}\\ \text{Land acquisition} & \text{120} & \text{95}\\ \text{Annual O&M} & \text{2} & \text{3}\\ \text{ Annual increase} & \text{4\\%} & \text{0.3}\\ \text{Major maintenance (Year 25)} & \text{185} & \text{210}\\ \text{Salvage cost} & \text{30} & \text{27}\\ \end{matrix} $$

All of the following are examples of cash outflows, except: (a) Asset salvage value (b) Income taxes (c) Operating cost of asset (d) First cost of asset

Javier is an IE at Lobos Manufacturing. He has been studying process line G to determine if an automated system would be preferred to the existing labor intensive system. If Lobos wants to earn at least 20% and uses a 15-year planning horizon, which alternative is preferred.

A man had to have the muffler replaced on his 2-year-old car. The repairman offered two alternatives. For $250 he would install a muffler guaranteed for 2 years. But for$400 he would install a muffler guaranteed "for as long as you own the car." Assuming the present owner expects to keep the car for about 3 more years, which muffler would you advise him to have installed if you thought 10% was a suitable interest rate and the less expensive muffler would only last 2 years?

You supervise an aging production line that constantly needs maintenance and new parts. Last month you spent $25,000 replacing a failed controller. Should the following plan be accepted if the interest rate is 15%? The net installed cost of the new line to replace the old line is$600,000 with a useful life of six years. In the first year its operating cost will be $100,000, and it will generate annual revenues of$300,000. Each year the operating cost will increase by $5000 and the revenues will fall by$15,000. After six years the equipment will have a value of $100,000 in the next re-building of the line

Perform the division. Divide

$$m ^ { 3 } - 4 m ^ { 2 } + 2 m - 1$$

by

$$m ^ { 2 } + 1$$

.

Two alternative courses of action have the following 0 schedules of disbursements. Based on a 4% interest rate, which alternative should be selected?

On February 1, the Miro Company needs to purchase some office equipment. The company is short of cash and expects to be short for several months. The treasurer has said that he could pay for the equipment as follows.

$$\begin{matrix} \text{Date} & \text{Payment}\\ \text{April. 1} & \text{\$150}\\ \text{June. 1} & \text{300}\\ \text{Aug. 1} & \text{450}\\ \text{Oct. 1} & \text{600}\\ \text{Dec. 1} & \text{750}\\ \end{matrix}$$

A local office supply firm will agree to sell the equipment to Miro now and accept payment according to the treasurer's schedule. If interest will be charged at 3% every 2 months, with compounding once every 2 months, how much office equipment can the Miro Company buy now? What is the effective interest rate?

Quinton's refrigerator has just died. He can get a basic refrigerator or a more efficient and environmentally friendly refrigerator with an Energy Star designation. Quinton earns 4% compounded annually on his investments, he wants to consider a 10-year planning horizon, and he will use present worth analysis to determine the best alternative. What is your recommendation?

$$\begin{matrix} \text{ } & \text{Basic Unit} & \text{Energy Star Unit}\\ \text{Initial cost} & \text{700} & \text{800}\\ \text{Delivery and installation} & \text{60} & \text{60}\\ \text{Professional servicing (year 5)} & \text{100} & \text{100}\\ \text{Annual energy costs} & \text{120} & \text{55}\\ \text{Salvage value (year 10)} & \text{150} & \text{175}\\ \end{matrix}$$

For a new punch press, company A charges $250,000 to deliver and install it. Company A has estimated that the machine will have operating and maintenance (O&M) costs of$4000 a year. You estimate an annual benefit of $89,000. Company B charges$205,000 to deliver and install the device. Company B has estimated O&M of the press at $4300 a year. You estimate an annual benefit of$86,000. Both machines will last 5 years and can be sold for $15,000. Use an interest rate of 12%. Which machine should your company buy?

Two alternative courses of action have the following schedules of disbursements:

$$\begin{matrix} \text{Year} & \text{A} & \text{B}\\ \text{0} & \text{-\$13,000} & \text{ }\\ \text{1} & \text{0} & \text{-\$1000}\\ \text{2} & \text{0} & \text{-\$2000}\\ \text{3} & \text{0} & \text{-\$3000}\\\text{4} & \text{0} & \text{-\$4000}\\ \text{5} & \text{0} & \text{-\$5000}\\ \text{ } & \text{-\$13,000} & \text{-\$15,000}\\ \end{matrix}$$

Based on a 10% interest rate, which alternative should be selected?

The half-life of thorium-227 is 18.72 days. How many days are required for three-fourths of a given amount of thorium-227 to decay?

On February I, the Miro Company needs to purchase some office equipment. The company is short of cash and expects to be short for several months. The treasurer has said that he could pay for the equipment as follows. A local office supply firm will agree to sell the equipment to Miro now and accept payment according to the treasurer's schedule. If interest will be charged at 2.5% every 2 months, with compounding once e very 2 months, how much office equipment can the Miro Company buy now? What is the effective interest rate?