Cases in Engineering Economy 2 nd by Peterson & Eschenbach
1
Case 11 Harbor Delivery
Teaching Notes:
1. Cell B46 is set up to use Goal Seek to find the breakeven point (Option) by guessing Nautical miles/day.
2. Problem best solved with EAW since lives different. If PW is used a common horizon (12 years) must be chosen.
3. The $500 insurance cost is treated as a cost for gas powered, but it could be a savings for diesel.
4. The timing of oil changes is based on number of operating hours/day – in practice more occur if done at night when 100 hours will
be exceeded during the coming day.
18%
200
18
365
Gasoline
$76,586
3
$500
21.1
$50
26
0
$3.15
$15
300
$25
100
$6,000
$38,000
Calculated cells
18.0
0.0
468
57
$20,696
$5,475
$1,643
6,000
$33,813
$18,250
$76,586
$38,000
$23,740.67
MARR
Nautical miles/day
Hours/day of operation
Days/year
Diesel
$97,995 Purchase price
4 Life
Insurance ($/yr)
17.4 Average speed (Knots)
0 Value of higher speed ($/day)
17 Fuel consumption (gal/hr)
1 Fuel consumption when idling
$2.95 Fuel cost ($/gal)
$15 Cost/refueling
300 Fuel capacity (gal)
$57 Oil change cost/change
100 Hours between oil changes
$9,000 Annual maintenance cost
$48,000 Salvage value
18.0
1.0
306
53
$19,382
$5,475
$3,745
9,000
$37,601
-
Hours of power unit operation/day
Hours of idling/day
Fuel (gal/day)
Fueling cost/day
Fuel cost/year
Fueling cost/year
Oil change cost/year
Annual maintenance cost
Annual operating costs
Annual value of higher speed
$97,995 EAC (Purchase)
$48,000 EAC (Salvage)
$26,153.25 EAC
-$2,413 Diesel EAC advantage
$23,740.67
equivalent annual cost