5- For the following three mutually exclusive alternative projects (A1, A2, or A3), select the best project based on ROR analysis assuming all projects have indefinite lives (infinite) and MARR is 12%. End of Year A1 A2 A3 Initial Cost: 8.000.000 6.000.000 10.000.000 Annual Revenues: 900,000 700.000 1.250.000 a) A1 b) A2 A3 d) A1 and A3 e) O A2 and A3 1. A1 and A2 Boş bırak

5- For the following three mutually exclusive alternative projects (A1, A2, or A3), select the best project based on ROR analysis assuming all projects have indefinite lives (infinite) and MARR is 12%. End of Year A1 A2 A3 Initial Cost: 8.000.000 6.000.000 10.000.000 Annual Revenues: 900,000 700.000 1.250.000 a) A1 b) A2 A3 d) A1 and A3 e) O A2 and A3 1. A1 and A2 Boş bırak

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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3. Evaluate the two machines below, using ROR analysis. Which machine should be selected, if MARR is 10%? Remember, the ROR equation should be set up to ensure equal service. Mach B -15,000 -25,000 -400 6,000 Mach A First cost ($) AOC ($) Salvage value (4) Life (yrs) -1,600 3,000 6
You are considering an open-pit mining operation. The cash flow pattern issomewhat unusual since you must invest in some mining equipment, conductoperations for two years, and then restore the sites to their original condition.You estimate the net cash flows to be as follows: N Cash flow 0 -$1,600,0001 1,500,0002 1,500,0003 -700,000 What is the approximate rate of return of this investment?(a) 25%(b)38%(c) 42%(d)62%
1. The Present Worth Method A project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $50,000; maintenance costs that start at $5,000 at the end of year (EOY) 1 and increase by $1,000 for each of the next 4 years, and then remain constant for the following 5 years; savings of $20,000 per year (EOY 1–10); and finally a resale value of $35,000 at the EOY 10. If the project has a 10-year life and the firm’s MARR is 10% per year, what is the present worth of the project? Is it a sound investment opportunity?
The Gigadigit Manufacturing Inc. is considering to produce a new product. The following data have been provided to management: Sales price S17.50/unit Equipment cost S250,000 Incremental overhead cost |550,000/year Sales and marketing cost $150,000/year Operating and maintenance cost $25/operating hour Production time/1,000 units 100 hours Packaging and shipping cost s0.50/unit Planning horizon Minimum attractive rate of return 15% 5 years The managers would like to know the viability of this product and how it would roll out in sales. (a) To give them basis and insight what is the break-even value of units that must be sold annually to keep the product viable? (b) If the target revenue is from 30,000 units sold, what is the expected profit? (C) If the profit drops by 13% due to equipment replacement, how much must have been the cost of the alternative equipment? (d) Provide graph for (a)
These data were derived from a forest inventory and are to be used to calculate the best (most revenue return) rotation. The manager wishes to maximize net income and has the following information: Establishment Costs: $175/acre Thinning and burning at age 17 cost: $75 Stumpage sells for: $41/unitvol MAR: 6.7% Annual Expenses: $8/acre Inventory Data over Life of the Forest Stand (Ages 0-60 years) Stand age (vol/acre) 15 5.13 20 13.98 25 25.22 30 35.11 35 44.19 40 51.85 45 56.79117447 50 63.03092644 55 68.76322479 60 74.05934015
An electronics firm is planning to manufacture a new handheld gaming device for the preteen market. The data have been estimated for the product. Assuming a negligible market (salvage) value for the equipment at the end of five years, determine the breakeven annual sales volume for this product.
Quèstion 12 A company has an export transaction with the payment term D/P T/R at 15 days after sight. Assuming the documents mailing period is 7 days, and the date of collection is July 1st (without considering the reasonable working hours of the bank). The date of payment is O July 1st July 8th O July 15th O July 22nd
Find the Present Worth of each of the option Investment: $10 million Annual Revenue: $103 million Breakdown: a) Ticket sales: $68 millionb) VIP Memberships: $13 million Concession revenues: $22 million Annual Costs: $75 million Breakdown: a) Maintenance: $35 millionb) Salaries: $8 millionc) Concession costs: $6 million d) Event Operations: $10 million e) Overhead: $16 million Major Maintenance Update every 20 years: $20 million GIVEN ASSUMPTIONS While any renovation is taking place, the stadium will be closed and there will be no annual revenue or annual costs It is estimated that all Annual Revenues grow at a rate of 1% per year, and all Annual Costs grow at a rate of 0.8% per year The MARR is 5% The stadium will only be used for 50 years after it is done being upgraded, and at that point it will have no salvage value.
You have been asked to perform an economic evaluation of two projects and recommend one of them for implementation. The project parameters are as follows: Project A Project B Discount Rate 4.0% 4.0% Your analysis concludes that: Project Cost $1,000,000 $750,000 Project Life (yrs) 10 15 Elec. Savings Elec. Cost (kWh/yr) ($/kWh) 800,000 600,000 O Project A is preferable, but Project B also has attractive performance. O Project B is preferable, but Project A also has attractive performance. O Project B is preferable and Project A results in a net loss. O Project A is preferable and Project B results in a net loss. $0.12 $0.12 Annual Cost Escalation Rate 1.5% 1.5%
2. Three mutually exclusive design alternatives are being considered. The estimated sales and cost data for each alternative are given on the next page. The MARR is 20% per year. Annual revenues are based on the number of units sold and the selling price. Annual expenses are based on fixed and variable costs. Determine which selection is preferable based on AW. State your assumptions. A в Investment cost Estimated units 60,000 20,000 $50,000 18,000 CLA to be sold/year Unit selling price, $/unit Variable costs, $/unit Annual expenses (fixed) Market value Useful life $4.40 $4.10 $1.00 $1.40 $1.15 $15,000 $30,000 $26,000 $20,000 10 years $15,000 10 years B PUBLICATIO 10 years
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.
3. As supervisor of a facilities engineering department, you consider mobile cranes to be critical equipment. The purchase of a new, medium-sized truck-mounted crane is being evaluated. The economic estimates for the two best alternatives are shown in the following table. MARR is at 15% per year. You can use the assumption of repeatability in this case. Alternative B A Capital investment $272.000 $346.000 Annual expenses Useful life (years) | Salvage value 28.800 19,300 6. 25,000 40.000 Show that the same selection is made for the following methods: a. RORAI method b. AWC method c. EUAC method