Basics of Engineering Economy 1st Edition by Leland Blank,Anthony Tarquin

Exercise 7

Equipment needed at a Valero Corporation refinery for the conversion of corn stock to ethanol, a cleaner- burning gasoline additive, will cost $75,000 and have net cash flows of $5,000 the first year, increasing by $0,000 per year over the life of 5 years.( a ) Determine the AW amounts at different MARR values to determine when the project switches from financially justified to unjustified.(Hint: Start at 12% per year and increase by 1% per year.) ( b ) If a spreadsheet is used, plot a graph of AW versus interest rate on the spreadsheet.