# Economic Problems – An engineer uses an economic analysis to determine which of the two

August 14, 2017

1. An engineer uses an economic analysis to determine which of the two machines to purchase. All the machines that are being considered are capable of performing the same task. Assume that the minimum attractive rate of return is 12% compounded monthly. What is the annual worth of the two machines? Which is the best investmentMachine X Machine YInitial cost 8,000 11,000Estimated life 3 years 3 yearsSalvage value 1,000 1,500Monthly Maint. Cost 1,500 1,475Monthly incomes 3,550 3,475a. EAW x = 1,784.76, EAW y = 1,646.83, X is the best investmentb . EAW x = 669.51, EAW y = 807.53, Y is the best investmentc. EAW x = 1,784.76, EAW y = 1,646.83, Y is the best investmentd. EAW x = 807.53, EAW y = 669.51, X is the best investment_______________________________2. An energy management system that can save 7,500 per year for four years, expenses are 2,000 per year, installed at a cost of 20,000. At the end of 4 years it is expected to be sold for 1,250. using the end of year convention, the rate of return on this planned investment is most nearly:a. ROR = 9.5%b. ROR = 10%c. ROR = 9.81%d. ROR = 6%