Posted on 07/27/2006 8:56:10 PM PDT by phantomworker
An airline is considering two types of engine systems for use in its planes. Each has the same life and the same maintenance and repair record.
- System A costs $100,000 and uses 40,000 gallons per 1000 hours of operation at the average load encountered in passenger service.
- System B costs $200,000 and uses 32,000 gallons per 1000 hours of operation at the same level.
Both engine systems have 3-year lives before any major overhaul. Based on the initial investment, the systems have 10% salvage values. If jet fuel costs $1.80 a gallon currently, and fuel consumption is expected to increase at the rate of 6% because of degrading engine efficiency (each year),
(1) Which engine system should the firm install? Assume a MARR (minimum attractive rate of return) of 10%. Use the AE (annual equivalent) criteria.
(2) What is the equivalent operating cost per hour for each engine?
Show your work.
I choose C
Can you solve this? It is a homework problem and FE exam level material.
B
I flipped a coin.
Sorry, Burning fuel causes global warming so you must junk the airplanes and ride your bike.
How did I do??
I haven't solved differential equations in five years.
LOL Close, but no cigar.
I am a civil engineer, and as such, at midnight, i have much beer in me, but I will have my staff run calcs in th morning, and will povide you the proper answer befoore shooting a guess from the cuff
No Diffy Q's, just plain algebra. Being the engine expert that you are, I thought of you right away.
Cheers!
I'm just an informed amateur.
Yeah, nice marr, but how long do they seriously plan to keep the chicken flying?
Me, I'd go cheap initial investment (they all do anyway!) and hope Pratt keeps up their current rate of effinciency increasses and re-engine in a decade, in spite of what the math shows.
LOL! It's only 9 pm here. Can't wait to hear from your staff in the morning.
LOL! Assume no labor strikes. This is Southwest Air.
Go for the Pratt and Whitneys. Those Rolls-Royces are pieces of junk.
I didn't see an option for General Electric or CFM, though.
You need to give the number of hours operated/yr. System B could be cheaper depending on fuel costs over the 3 year period.
This is a real homework problem. No more information is given.
B. "A" engine Costs 14 Million dollars more to operate based on $1.80 fuel.
Duh. Too easy.
How did I do??
On Rush today he said the NY Slimes reported bicycle riders contribute more to global warming because they live longer. Junk the bike and ride the airplane.
How's the studying going for the FE exam?
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