electric power plant and to deposit sufficient money in a perpetual

ENGR 3315 Exam #2 Name: _________________ ________________ Tuesday, March 20, 2012 (First) (Last) Instructor: Dr. Michelle Londa Instructions: A. Write your name in the space provided in the upper right hand corner of each page. B. There are 9 long calculations for a total of 100 points; you must show all equations and all work to receive full credit for these problems. C. You may use your book and a calculator. Please strictly adhere to all codes pertaining to academic honesty. D. Exam is due by 11:00am on Tuesday, March 20, 2012. 1.

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ENGR 3315 Exam #2 Name: _________________ ________________ Tuesday, March 20, 2012 (First) (Last) Instructor: Dr. Michelle Londa Instructions: A. Write your name in the space provided in the upper right hand corner of each page. B. There are 9 long calculations for a total of 100 points; you must show all equations and all work to receive full credit for these problems. C. You may use your book and a calculator. Please strictly adhere to all codes pertaining to academic honesty. D. Exam is due by 11:00am on Tuesday, March 20, 2012. 1. A taxicab company maintained accurate records of the expenses for one of its automobiles from January 1, 1996 through January 1, 2002. It is found from the records, the annual operating expense is $4,000. The maintenance and repair costs are $500 for 1996, $1,000 for year 1997, $1,500 for year 1998, and so on. What is the net present cost of owning and operating the automobile, if its initial price was $30,000 and the interest rate is 5%? (8 points) 2. A municipal contractor has agreed to construct an electric power plant and to deposit sufficient money in a perpetual trust fund to pay a $10,000/year operating cost and to perform a major renovation to the plant every 15 years at a cost of $200,000. The first renovation is to take place fifteen years from now. The plant itself will initially cost $500,000 to construct. If the trust fund earns 10% interest per year (compounded annually), what is his capitalized cost to construct the plant, to make the future periodic renovations, and to pay the annual operating costs forever. (7 points) ENGR 3315 Exam #2 Name: _________________ ________________ Tuesday, March 20, 2012 (First) (Last) Instructor: Dr. Michelle Londa 3. PARC Co. has asked you to recommend a new nutcracker machine. After months of hard research, you have collected the following data: Data KRAX SPLIT-NUT Life, Years 6 9 First Cost (FC) $202,000 $285,000 Benefit, Yearly (AB) $73,000 $88,000 Gradient (ABG) $1,200 $1,300 M&O…

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