Question

A mechanic with Triumph Composites bought a Boeing 747 carbon break unit for $5,000 in 1998 when

the M&S equipment cost index had a value of 1,090. At this time, technology allowed only for a

maximum breaking compression of 500 psi. Ten years later (by 2008), technological advances

promoted maximum break compression of 1000 psi for the equivalent 747 carbon break unit. If the

exponent in the cost-capacity equation is 0.52 and the M&S index value is 1,510 (in 2008), find the

mechanic’s cost for the equivalent carbon airbrake unit in 2008 (answer closest to)

a. $9,950

b. $10,350

c. $11,050

d. $12,100

Answer 1

Value of equipment in 1998 = $5,000

Compression power in 1998 = 500 psi

Compression power in 2008 = 1,000 psi

Cost index in 1998 = 1,090

Cost index in 2008 = 1,510

Cost-capacity exponent = 0.52

Calculate the value of equipment in 2008 -

Value = Value of equipment in 1998 * (Compression power in 2008/Compression power in 1998)^{Cost-capacity exponent} * (Cost index in 2008/Cost index in 1998)

Value = $5,000 * (1,000/500)^0.52 * (1,510/1,090)

Value = $5,000 * 1.4339 * 1.3853

Value = $9,932

This answer is closest to $9,950.

Thus,

The mechanic's cost for the equivalent carbon air brake unit in 2008 (answer closest to) is $9,950.

Hence, the correct answer is the option (a).