CME 182 Engineering Design and Graphics CME 250 Statics CME 260 Mechanics of Materials CME 390 Composites Manufacturing CME 401 Engineering Economics CME 420 Manufacturing Systems Analysis CME 475 Design Project I CME 480 Design Project II
Office Hours D2L Brightspace Dept of Composite Materials Engineering
Professor Dennehy
Department of Composite Materials Engineering
Stark Hall 203F (507) 457-5276 kdennehy@winona.edu
CME 401 Engineering Ecomonics
Description Information Objectives Calendar Requirements
Depreciation Income Taxes Cash Flows Inflation Capitalized Costs Deciding on Investments Bonds
Homework Problems

Present Worth, Future Worth, EUAS/EUAC, Internal Rate of Return

1. A used machine costs $20,000 to purchase. It has an annual maintenance cost of $20,000, a salvage value of $5,000, and a 10-year life. The interest rate is 10% per year, compounded annually,

(a) What is the present worth cost of the machine?

(b) What is the future worth cost of the machine?

(c) What is the EUAC (equivalent uniform annual cost) of the machine?

(d) What is the capital recovery of the machine (the value of capital recovery represents the annualized net cost of the machine, it does not take into account operating or maintenance expenses associated with the asset)

2. Compute the IRR for the following cash flows:

end of year 0 1 2 3
cash flow, $1,000 -50 30 -1 30