Question 3.4Consider the following two mutually exclusive projects:YearA1A20-$1,800-$3,6001-$500-$ 6002-$500- $6003-$500- $600-$500- $600$ 500+400- $600- $600- $6008- $600+1000a What assumption(s) do you need in order to compare a set of mutually exclusive serviceprojects with unequal service lives?b With the assumption(s) defined in part (a) and using 10%, determine which project shouldbe selected.c If your analysis period (study period) is just 4 years, what would be the salvage value ofproject A2 at the end of year 4 to make the two alternatives economically indifferent?

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Answered: Question 3.4 Consider the following two…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which of the five project net cashflows presented in the table below would be considered a Conventional cashflow? Note: This is a Multiple Answer question. Please select all of the following options you think are correct? Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Project 1 -50,000 30,000 15,000 5,000 3,000 7,000 13,000 Project 2 -50,000 -10,000 50,000 70,000 3,000 -2,000 -5,000 Project 3 -100,000 -20,000 50,000 80,000 120,000 Project 4 -70,000 -30,000 20,000 70,000 -10,000 5,000 20,000 Project 5 -80,000 -40,000 -35,000 23,000 47,000 43,000 19,000 O Project 4 O Project 2 O Project 5 Project 1 Project 3
A firm has a capital budget of $30,000 and is considering three possible independent projects. Project A has a present outlay of $12,000 and yields $4,231 per annum for 5 years. Project B has a present outlay of $10,000 and yields $4,184 per annum for 5 years. Project C has a present outlay of $17,000 and yields $5,802 per annum for 10 years. Funds which are not allocated to one of the projects can be placed in a bank deposit. Identify seven combinations of project investments and a bank deposits which exhaust the budget. Which of the above combinations should the firm choose when the bank deposit rate is (i) 15% or (ii) 20%? Explain your answer and show your work. Suppose there is no option to deposit in the bank, but the projects are "divisible" (e.g. you may have 25% of project A). Which combination should the firm choose? Explain your answer and show your work. Use 15% as the deposit rate (discount rate).
Q2) The two projects as part of oil industrial their cash flows in tables belwo: project B: r=8% cash flow (CF) project A:r=8% year cash flow (CF) -398 -242 1 120 105 2 175 105 280 115 Required: a) Find NPV for both project on base of r = 8%? b) Find the required IRR for both project and evaluate them based on this proceuder? Let the required IRR on range (10-20)%? c) Evaluate the mentioned project by using Pl during r=8%? %3D
What does the term engineering economic decision refer to in all investment decisions relating to an engineering project?
Q1) The following figures indicate to cash flows for project (X, Y, Z) respectively. project Z: Project X :r=11% cash flow (CF) project Y: r=11% cash flow (CF) r=11% year cash flow (CF) -999 -342 -10202 1 290 105 1300 310 105 1390 3 315 115 1690 4 810 119 2460 5 820 290 2600 825 390 2890 7 905 420 2989 6.
1. Use the first four steps of the decision-making process to generally describe the alternatives and identify what economic-related estimates you will need to complete an engineering economy analysis for the president. 2. Identify any noneconomic factors and criteria to be considered in making the alternative selection. 3. During your inquiries about alternative B from its manufacturer, you learn that this company has already produced a prototype molding machine and has sold it to a company in Germany for $3 million (U.S.dollars). Upon inquiry, you further discover that the German company already has unused capacity on the equipment for manufacturing plastic shells.The company is willing to sell time on the equipment to Innovations immediately to produce its own shells for U.S.delivery. This could allow immediate market entry into the United States.Consider this as alternative C,and develop the estimates necessary to evaluate C at the same time as alternatives A and B.
Case Study: Refrigerator ShellsQuestions: 1. Use the first four steps of the decision-making process to generally describe the alternatives and identify what economic-related estimates you will need to complete an engineering economy analysis for the president. 2. Identify any noneconomic factors and criteria to be considered in making the alternative selection. 3. During your inquiries about alternative B from its manufacturer, you learn that this company has already produced a prototype molding machine and has sold it to a company in Germany for $3 million (U.S.dollars). Upon inquiry, you further discover that the German company already has unused capacity on the equipment for manufacturing plastic shells.The company is willing to sell time on the equipment to Innovations immediately to produce its own shells for U.S.delivery. This could allow immediate market entry into the United States.Consider this as alternative C,and develop the estimates necessary to evaluate C at the same…
A manufacturer plans to introduce a new type of shirt based on the following information. The selling price is $57.00; variable cost per unit is $18.00; fixed costs are $7800.00; and capacity per period is 500 units. a) Calculate the break-even point (i) in units (ii) in dollars (2 decimal places) (iii) as a percent of capacity b) Draw a detailed break-even chart. (You do not have to submit this part; just draw it for your own practice.) c) Calculate the break-even point (in units) if fixed costs are reduced to $7020.00 d) Calculate the break-even point (in dollars) if the selling price is increased to $78.00
Use the following information to calculate the change in value that would result if the benchmark were achieved for this company for a full year: Benchmark Cost per Occupied Room $ 3.85 Current Cost Per Occupied Room Total Rooms (per day) $ 4.00 1,500 Occupancy percentage Capitalization Rate 78 % 6 % Show your work.
Annual expenses for two alternatives have been estimated on different bases as follows. End of Year Annual Expenses Estimated in Future $ 1 2 3 4 Alt. A O Between $300,000-387,000 O Between $387,000-388,000 O Between $388,000-390,000 O Higher than $390,000 120,000 132,000 148,000 168,000 Alt. B Annual Expenses Estimated in Real $ with base=0 100,000 110,000 120,000 130,000 If the average general price inflation rate is expected to be 6% per year and the real rate of interest is 9% per year, what is the PW of Alt. A.? (use positive sign for expenses) Hint: Purchasing power remains the same in year 1 with respect to b=0.
1 Capitalized cost: Select one: a. is the net present value (NPV) of a perpetual series of cash flows b. is a cash flow series that allows the principal to be withdrawn every year and the amortization will always remain c. is a special kind of present worth analysis that chooses between alternatives with different duration d. is the future sum needed to provide a perpetual series of cash flows that will support a capital project.
05. Mr. A, an elderly descendant from the Laksam Nabab family, while in need of cash fund handed over an old Longcase clock with ornamental engraved designs on it (in fact, an antique) to an Auction House at Dhaka to sell the same in public auction for him and informed them that the above clock should not be sold below an amount of Tk. 250,000/-. One Mr. Ralman (an antique collector having good knowledge of antiques and their values) became interested on it and followed the items on different auction dates and found that nobody is bidding for the same for more than Tk. 1,00,000/- or so (not understanding the real value of it). But he still keeps on waiting and finally bought it for Tk. 150,000/- having knowledge of the 'reserved price' for the said item, which was earlier fixed at Tk. 250,000/-. In terms of the auction, Mr. Ralman paid Tk. 150,000/- to the Auction House and took delivery of the Longcase clock accordingly. While the Auction House asks the owner of the Longcase clock…

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