Engineering Economy

1. The U.S. Border Patrol is considering the purchase of a new helicopter for aerial surveillance of the New Mexico-Texas border with Mexico. A similar helicopter was purchased 4 years ago at a cost of$140,000. At an interest rate of 7% per year, what would be the equivalent value today of that $140,000 expenditure?

2. The current cost of liability insurance for a certain consulting firm is $65,000. If the insurance cost is expected to increase by 4% each year, what will be the cost 5 years from now?

3. Find the numerical value of the following factors by (a) interpolation and (b) using the appropriate formula.

i. (P/F,18%,33) ii. (A/G,12%,54)

4. A cash flow sequence starts in year 1 at $3000 and decreases by $200 each year through year 10. (a) determine the value of the gradient G; (b) determine the amount of cash flow in year 8; and (c) determine the value of n for the gradient.

5. San Antonio is considering various options for providing water in its 50-year plan, including desalting. One brackish aquifer is expected to yield desalted water that will generate revenue of $4.1 million per year for the first 4 years, after which less production will decrease revenue each year by $50,000 per year. If the aquifer will be totally depleted in 25 years, what is the present worth of the desalting option at an interest rate of 6% per year?