# Ch 2 Questons

Pages: 5 (1289 words) Published: February 2, 2013
2.10 Bodine Electric makes gear motors with a three-stage, selectively hardened gearing cluster that is permanently lubricated. If the company borrows \$20 million for a new warehouse/distribution facility, determine the annual payments to repay the loan in six equal annual payments at an interest rate of 10% per year?

2.11 A small oil company wants to replace its Micro Motion Coriolis flowmeters with Emerson F-Series flowmeters in Hastelloy construction. The replacement process will cost the company \$50,000 three years from now. How much money must the company set aside each year beginning one year from now in order to have the total amount in three years? Assume the company will invest its funds at 20% per year.

2.12 Ametek Technical & Industrial Products manufactures brushless blowers for boilers, foodservice equipment, kilns, and fuel cells. The company borrowed \$17,000,000 for a plant expansion and repaid the loan in eight annual payments of \$2,737,680, with the first payment occurring one year after the company received the money. What was the interest rate on the loan?

2.13 The cost of a border fence is \$3 million per mile. If the life of such a fence is assumed to be 10 years, what is the equivalent annual cost of a 10-mile long fence at an interest rate of 8% per year?

2.14 Silastic-LC-50 is a liquid silicon rubber designed to provide high clarity, superior mechanical properties, and short cycle time for high speed manufacturers. One high-volume manufacturer used it to achieve smooth release from molds. The company’s projected growth would result in silicon costs of \$26,000 in year 1 and costs increasing by \$2000 per year through year 5. At an interest rate of 10% per year, what is the present worth of these costs?

2.15 Calculate the equivalent annual cost of fuel for mail trucks that records indicate costs \$72,000 in year one, increasing by \$1000 per year through year five. Use an interest rate of 8% per year.

2.16 A company that manufactures air-operated drain valve assemblies budgeted \$84,000 per year to pay for repair components over the next five years. If the company expects to actually spend \$15,000 in year 1, how much of a uniform (constant) increase each year does the company expect in the cost of the parts? Assume the company uses an interest rate of 10% per year.

2.17 A company that manufactures a revolutionary aeration system (it combines coarse and fine bubble aeration components) had costs this year (year 1) of \$9,000 for check valve components. Based on completion of a new contract with a distributor in China and volume discounts, the company expects this cost to decrease. If the cost in year 2 and each year thereafter decreases by \$560, what is the equivalent annual cost for a five-year period at an interest rate of 10% per year?

2.18 For the cash flows shown below, determine the value of G that makes the present worth in year 0 equal to \$14,000. The interest rate is 10% per year.

Year 0 12 3 4
Cash flow, \$ per year -- 8000 8000-G 8000-2G 8000-3G

2.19 The cost for manufacturing a component used in intelligent interface converters was \$23,000 the first year. The company expects the cost to increase by 2% each year. Calculate the present worth of this cost over a five-year period at an interest rate of 10% per year.

2.20 Many companies offer retirement plans wherein the company matches the contributions made by the employee up to 6% of the employee’s salary. An engineer planning for her retirement expects to invest the maximum of 6% each year. If her salary in year one is \$60,000 and it increases by 4% each year, how much...