Munabhai A device captures waste heat from a nuclear reactor and allows it to be converted and sold asenergy to nearby plants. The nuclear company has a remaining 2 years before it will be shut down.The initial cost of the device is £500,000. When installed in year 0 it produces £100,000 net revenue(revenue net of operating cost) one year later and £500,000 two years later. The nuclear companyuses a high discount rate of 20% because it has other productive uses for its cash. What is the NPVfor installing this device?HINT: a discount rate of 20% means that the discount factor to multiply year 1 cash flow by is1/(1+0.2)=1/1.2.

The concept of Net Present Value (NPV) is a fundamental financial evaluation tool used to assess the…

Answered: A device captures waste heat from a…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section: Chapter Questions

Problem 47P

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A company has two products, which both sell in quantities of 20. Product A sells for $35/unit with a profit margin of 20%. Product B sells for $50/unit with a profit margin of 13%. Product A has a lost sale probability of 25% when out of stock, and Product B has a lost sale probability of 35% when out of stock. Which product is the more "expensive", in terms of lost sales, if it were to experience a stockout? O No answer text provided. O Product A O They both have the same cost of lost sales same O Product B
Your answer is partially correct. An independent contractor for a transportation company needs to determine whether she should upgrade the vehicle she currently owns or trade her vehicle in to lease a new vehicle. If she keeps her vehicle, she will need to invest in immediate upgrades that cost $5,200 and it will cost $1,300 per year to operate at the end of year that follows. She will keep the vehicle for 5 years; at the end of this period, the upgraded vehicle will have a salvage value of $3,800. Alternatively, she could trade in her vehicle to lease a new vehicle. She estimates that her current vehicle has a trade-in value of $9,800 and that there will be $4,100 due at lease signing. She further estimates that it will cost $2,900 per year to lease and operate the vehicle. The independent contractor's MARR is 11%. Compute the EUAC of both the upgrade and lease alternatives using the insider perspective. Click here to access the TVM Factor Table Calculator. 1943.56 EUAC(keep): $…
A machine that costs $8,000 is expected to operate for 10 years. The estimated salvage value at the end of 10 years is $0. The machine is expected to save the company $1,554 per year before taxes and depreciation. The company depreciates its assets on a straight-line basis and has a marginal tax rate of 35 percent. What is the internal rate of return on this investment?
A manufacturer has a production facility that requires 10,237 units of component JY21 per year. Following a long-term contract, the manufacturer purchases component JY21 from a supplier with a lead time of 6 days. The unit purchase cost is $31.4 per unit. The cost to place and process an order from the supplier is $168 per order. The unit inventory carrying cost per year is 12.2 percent of the unit purchase cost. The manufacturer operates 250 days a year. Assume EOQ model is appropriate. If the manufacturer uses a constant order quantity of 1,053 units per order, what is the annual holding cost? Use at least 4 decimal places.
The calculation determines profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero
Non-inventory goods were purchased and delivered on June 15, 2010. Several security interests exist in these goods. Which of the following security interests has priority over the others? Group of answer choices purchase money security interest perfected June 24, 2010 Security interest perfected June 20, 2010 Security interest attached June 15, 2010 Security interest in future goods attached on June 10, 2010
A swim club is designing a new pool to replace its old pool. The new pool would need to last for 10 years since the club is planning on relocating after 10 years. A concrete shell would cost $85,000 and last for all 10 years. Another option is to install a vinyl liner that would cost only $70,000 to install. However, the vinyl is not guaranteed to last for all 10 years, and it has a 40% chance of breaking down. Repair of the vinyl would cost $40,000 and would extend the life of the vinyl liner to the 10-year mark. If both options are acceptable to the swim club, which one minimizes cost? Support your answer with drawing a decision tree and provide your calculation.
Consider a hybrid vehicle with a sticker price of $31,500. This vehicle will average 30 miles per gallon of gasoline. A tax credit of $1,500 for the hybrid vehicle effectively reduces its sticker price to $30,000. A comparably equipped gasoline-only vehicle will cost $28,000 and will average 25 miles per gallon of gasoline. Assuming an interest rate of 3% per year and a study period of five years, find the breakeven mileage per year between the hybrid vehicle and the gas-only vehicle. All other factors remain the same and assuming the gasoline costs $4.00 per gallon.
The army is attempting to determine the optimal replacement age for a piece of field equipment. The equipment costs $280,000 to replace. The manufacturer will supply a rebate toward the next purchase that declines at a rate of 20 percent per year. Maintenance costs for the first year are estimated to be $1,000, and they increase roughly at the rate of 18 percent per year. Estimate the number of years that the army should hold the equipment before making a replacement.(Production and Operation Analysis by Steven Nahmias, 7th edition, pg.774 Problem # 24)
A firm sells two products. Product R sells for $20; its variable cost is $6. Product S sells for $50; its variable cost is $30. Product R accounts for 60 percent of the firm’s sales, while S accounts for 40 percent. The firm’s fixed costs are $4 million annually. Calculate the firm’s break-even point
Multiple Choice As the discount rate increases, the present value of a positive cash flow to be received at a particular time in the future: gets closer to zero gets larger without limit stays unchanged gets smaller without limit
“As soon as the customer places an Order, it is received by the Sales department and a Sales Order is created. The Sales Order is sent to the Finance Department to check if the customer has any outstanding balance for more than 60 days. The AR Clerk at the Finance Department checks and sends the results back to the Sales Department. If there is an outstanding balance for more than 60 days, the Sales Department puts the Order on hold and notifies the customer. Otherwise, the Order Entry Clerk creates an Order Confirmation and sends it to the customer. Simultaneously a Picking List is generated and sent to the Order Fulfilment Department who picks up the next set of process steps. The Order Fulfilment Department receives the Picking List and determines which Warehouse is closest to the Customer location. The Picking List is sent to that Warehouse location. There, the items from the Picking List are picked. An Invoice is generated and printed. The items are packed along with the printed…

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