Alternatives for constructing a new facility which are mutually exclusive are being considered. The annual equivalènt costs and estimated benefits of the alternatives are as follows: Alternative Cost Benefits $1,050,000 $900,000 $1,230,000 $1,350,000 $990,000 $1,110,000 $810,000 $1,390,000 $1,500,000 $1,140,000 A D E Using the B-C ratio, which alternative, if any, should be adopted for investment?
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- Two alternatives are being considered for a certain project. B $15,000 $3,800 Initial Cost Uniform annual benefits Useful life A $10,000 $2,500 O a. 1.37 O b. 1.27 O c. 1.07 O d. 1.17 6 6 If money is worth 12% annually, compute the benefit ratio of the difference between the alternatives.A firm is considering three mutually exclusive alternatives as part of a production improvement program . The alternatives are : Alternative A ( i = 12 % ) B ( i = 10 % ) C ( i = 15 % ) Installation Cost ( U ) 200,000 270,000 190,000 Uniform Annual 30,750 40,500 30,250 Benefit ( U ) Useful life in years 12 15 14 Which of the above should be chosenA company is looking at five different potential projects, but it can only do one of them. Which project should the company select? For this question, use the following information: Project A B D E Initial Investment -3,300 -6,500 -5,300 -7,000 -5,500 Annual Benefit 650 1,200 950 1,250 1,000 Salvage Value 150 425 300 1,000 200 Useful life 10 10 10 10 10 IRR 14.99% 13.51% 12.74% 13.26% 12.93% E-A C-A В-А D-A D-B Delta IRR 9.68% 8.88% 11.97% 11.78% 10.90% C-E B-E D-E В-С D-C Delta IRR 18.90% 16.44% 14.29% 16.79% 14.71% Which project should be selected if MARR is 10% (mutually exclusive)? D OA Oc OB
- Question #1a) What is a âtransfer price?âb) List and describe 3 main reasons for using transfer prices.Question #2Consider the following information about a potential project:Investment requiredExpected annual project revenueExpected annual project expensesRequired rate of returnCurrent division return on investment$3,000,000$6,000,000$5,550,00011%18%a) Calculate the projectâs return on investment.b) Based solely on ROI, is this project in the firmâs best interests? Why or why not?c) Is this project in the division managerâs best interests? Why or why not?d) Perform DuPont Analysis on this project.e) What is the projectâs residual income?Question #3List and describe five traits that can differentiate a customer that is relatively inexpensive to service from a customer that is relatively expensive to service.Question #4List and describe five actions a firm can take if a customer appears…A company is looking at five different potential projects, but it can only do one of them. Which project should the company select? For this question, use the following information: Project A B. D Initial Investment -3,300 -6,500 -5,300 -7,000 -5,500 Annual Benefit 650 1,200 950 1,250 1,000 Salvage Value 150 425 300 1,000 200 Useful life 10 10 10 10 10 IRR 14.99% 13.51% 12.74% 13.26% 12.93% E-A C-A B-A D-A D-B Delta IRR 9.68% 8.88% 11.97% 11.78% 10.90% C-E B-E D-E B-C D-C Delta IRR 18.90% 16.44% 14,29% 16.79% 14.71% Which project should be selected if MARR is 10% (mutually exclusive)? A OD OB OEThe following information is available on two mutually exclusive projects. Project Year 0 Year 1 Year 2 Year 3 Year 4 A -$700 $200 $300 $400 $500 B -$700 $600 $300 $200 $100 If the required rate of return is 10%, which project should be selected using the net present value (NPV) method? Group of answer choices A B
- S A firm is considering three mutually exclusive alternatives as part of a production improvement program. The alternatives are as follows 28 B Installed cost S8.000 S12,000 S16.000 Uniform annual benefit 1,600 1,750 2.050 Useful life, in years 10 20 20 For each alternative, the salvage válue at the end of useful life is zero. At the end of 10 years, Alt. A could be replaced by another A with identical cost and benefits. (a) Construct a choice table for interest rates from 0 to 100 (b) The MARR is 12. If the analysis period is 20 years, which alternative should be selected?Coffer Company is analyzing two potential investments. Cost of machine Project X $ 97,090 Net cash flow: Year 1 Year 2 Year 3 Year 4 Project Y $ 72,000 36,500 3,700 36,500 33,500 36,500 33,500 0 13,000 If the company is using the payback period method, and it requires a payback period of three years or less, which project(s) should be selected? Multiple Choice ○ Project Y. ○ Project X. Both X and Y are acceptable projects. Neither X nor Y is an acceptable project. Project Y because it has a lower Initial Investment.Calculate the modified benefit-cost ratio for the alternative: Initial Investment Cost : 350000 Revenues : 150000 Costs : 55000 Salvage : 120000 n : 7 MARR : 0.1 a.1.4599 b.1.4101 c.1.6035 d.1.7354 e.1.6480
- Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects’ NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?The following information is available on two mutually exclusive projects. Project Year 0 Year 1 Year 2 Year 3 Year 4 A -$700 $200 $300 $400 $500 B -$700 $600 $300 $200 $100 If the required rate of return is 10%, which project should be selected using the internal rate of return (IRR) method? Group of answer choices A B8. Analysis of a replacement project Aa Aa At times firms will need to decide if they want to continue to use their current equipment or replace the equipment with newer equipment. The company will need to do replacement analysis to determine which option is the best financial decision for the company. Johnson Co. is considering replacing an existing piece of equipment. The project involves the following: The new equipment will have a cost of $1,800,000, and it will be depreciated on a straight-line basis over a period of six years (years 1-6). • The old machine is also being depreciated on a straight-line basis. It has a book value of $200,000 (at year 0) and four more years of depreciation left ($50,000 per year). The new equipment will have a salvage value of $0 at the end of the project's life (year 6). The old machine has a current salvage value (at year 0) of $300,000. Replacing the old machine will require an investment in net working capital (NWC) of $60,000 that will be…