Pixonix Case

IE 342

Spring 2010

HW3

Due to: 13.April.2012, 17:00

By: Figen EREN-Ahmet Reha BOTSALI

Q1)         A constructionengineer has been asked to recomment an excavator for acquisition. Three alternatives have been identified, having the characteristics shown in the following table. (MARR =12%)

1. Apply present worth analysis.
2. Use shortest life to establish the planning horizon’s length and apply present woth analysis again.
3. Use longest life to establish the planning horizon’s length and apply present woth analysis once more.
4. Repeat PW analysis for 10 years standard analysis period.
5. Consider an infinitely long planning period and calculate the annual worth for each investment alternatives.

Q2)         To automatically insert components in printed circuit boards for a cell phone prduction line, a $500,000 surface mount placement (SMP) machine is evaluated by a manufacturing engineer at Motorola. Over the 10-year planning horizon, it is estimated  that  the SMP machine will produce annual after tax cost savings of $92,500. The engineer estimates the machine will be $50,000 at the end of 10-year period. Based on the firm’s 10% after tax MARR, should the investment be made?

Q3)        A new highway is to be constructed, and asphalt paving will be used. The asphalt will cost $150 per foot, including the material and the paving operation. Due to the heavy usage expected, the asphalt is expected to last 5 years before requiring resurfacing. It is anticipated that the cost of resurfacing will remain the same per foot. Concrete drainage ditches will be installed to each side of the highway; they will each cost $7.75 per foot to install. Ditches will have to be replaced every 15 years; the cost of replacing them will also be $7.75 per foot. Four pipe culverts will be installed every mile; each culvert will cost $8,000 and will last 10 years; replacement culverts will cost $10,000 each, indefinately. Annual maintanance of the highway will cost $9,000 per mile. Cleaning each culvert will cost $1,250 per year. Cleaning and maintaining each ditch will cost $3.75 per foot per year. Determine the capitalized cost (CC) per mile of highway using a MARR of 5%.  

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