To demonstrate that engineering decisions must be communicated to someone in the business world, we have assigned two writing exercises. These assignments are to be one page in length and should convey the following information. Each paragraph accomplishes a specific task as follows :
1.) Orient the reader to what you have done and why
2.) Describe the approach to the problem
3.) Give results of your analysis ( not the analysis )
4.) Draw conclusions and recommend action
Assignment #1 Problem 5- 54 Letter to PennDOT Official
Write a business letter to an appropriate Penn DOT official as if you were assigned the problem of recommending a paving material for a section of highway. Your goal is to choose between two surface materials based on the data given. You are using the capitalized cost method. Use standard business letter format to report your results. You can invent your own business letterhead if you like. You must limit this letter to one page only.
Problem 5-54:
Use capitalized cost to determine which type road surface is preferred on a particular section of highway. Use 12% interest rate.
Answer For the project A:
The $500,000 first cost is already a present worth the $350,000(perodic resurfacing) which occurs every 10years can be converted into an infinite A using the A/F factor for one life cycle. dividing the A value by i and adding it to the $500,000 .
cc= – $500,000 -$35,000/0.12 – $350,000(A/F12%,10)/0.12
= -$500,000 -$291,667 – $350,000(0.0570)/0.12
= -$500,000 -$291,667 – $166,250
= -$957,917
For project B
The $700,000 first cost is already a present worth the $450,000(perodic resurfacing) which occurs every 15years can be converted into an infinite A using the A/F factor for one life cycle. dividing the A value by i and adding it to the $700,000 .
cc= – $700,000 -$25,000/0.12 – $450,000(A/F12%,15)/0.12
= -$700,000 -$208,333 – $450,000(0.0268)/0.12
= -$700,000 -$208,333 – $100,500
= -$1,008,833
Using capitalized cost A type of road surace is preffered because less cost involves more revenue.
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