EUROPEAN UNIVERSITY OF LEFKE
FACULTY OF ARCHITECTURE AND ENGINEERING
ECON 305 ENGINEERING ECONOMICS FALL 10-11 QUIZ (Gr.3)
Date: 16. 12. 2010
Instructor: Prof. Dr. Hüseyin Oğuz
Time:12:00-12:50
Room#: CL009
Student Registration No:___________________
Student Name-Surname:__________________________________
Important Note: Your own interest/formula table and calculator are allowable to use during quiz
with forbidding of its exchange. Please start to answer from the front side of this paper.
QUESTION:
An environmental engineer is considering three methods for disposing of a nonhazardous chemical
sludge: land application, fluidized-bed incineration, and private disposal contract. The details of
each method are shown below. Determine which has the least cost on the basis of an annual
equivalent worth comparison at 12% per year.
Initial cost, $
Annual cost, $/year
Salvage value, $
Life, years
Land Application
-110 000
-95 000
15 000
3
Incineration
- 800 000
- 60 000
250 000
6
SOLUTION:
AEWland = -110 000(A/P,12%,3) –95 000 + 15 000(A/F,12%,3)
= -110 000(0.4163) –95 000 + 15 000(0.2963)
= $-136 349
AEWincin = -800 000(A/P,12%,6) –60 000 + 250 000(A/F,12%,6)
= -800 000(0.2432) –60 000 + 250 000(0.1232)
= $-223 760
AWcontract = $-190 000
(Factors were taken from Table/p.887)
Select land application (AEC is minimum).
Private Contract
0
-190 000
0
2
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