Engineering Economics Question 2022

Running Head: ENGINEERING ECONOMICS 1
ENGINEERING ECONOMICS

ENGINEERING ECONOMICS
Contents
Question 1........................................................................................................................................3
Question 2........................................................................................................................................3
A).................................................................................................................................................3
B)..................................................................................................................................................4
C)..................................................................................................................................................5
D).................................................................................................................................................5
Question 3........................................................................................................................................5
References........................................................................................................................................6

ENGINEERING ECONOMICS
Question 1
The cash inflows and the cash outflows of the company have been recorded in the table
below. The salvage value has been added in the cash inflows as the amount of the salvage value
will be present till the end of the 5th year. On the other hand the capital expenditure and operating
costs have been added in the cash outflows. In order to arrive that the net cash flows, cash
outflows have been deducted by the cash inflows (Noussair & Tucker, 2016).
Question 2
A)
PROBLEM 5.1
CASH INFLOWS
Savings in labour 45000 per year
Salvage value 3000 at the end of 5 year
CASH OUTFLOWS
Capital expenditure 30000 at the year 0
Operating costs 15000 per year
NET CASH FLOWS
Years Inflow Outflow Net Flow
0 30000 -30000
1 45000 5000 40000
2 45000 5000 40000
3 45000 5000 40000
4 45000 5000 40000
5 48000 5000 43000
Total 228000 55000 173000
Briaclifff Stove Company
Cash investment Amount
Year 0 $ 700,000.00
Year 1 $ 1,000,000.00