4. Konica Minolta plans to sell a copier that prints documents on both sides simultaneously, cutting in half the time it takes to complete big commercial jobs. The costs associated with producing chemicallytreated vinyl rollers and fi ber-impregnated rubber rollers are shown below. Determine which of the two types should be selected by calculating the rate of return on the incremental investment. Assume the company's MARR is 21% per year. Treated Impregnated First cost, $ Annual cost, $ per year Salvage value, $ Life, years - 50,000 -100,000 5,000 -95,000 -85,000 11,000 3 6 PLEASE DONT USE EXCEL, PLEASE USE FORMULATION.

4. Konica Minolta plans to sell a copier that prints documents on both sides simultaneously, cutting in half the time it takes to complete big commercial jobs. The costs associated with producing chemicallytreated vinyl rollers and fi ber-impregnated rubber rollers are shown below. Determine which of the two types should be selected by calculating the rate of return on the incremental investment. Assume the company's MARR is 21% per year. Treated Impregnated First cost, $ Annual cost, $ per year Salvage value, $ Life, years - 50,000 -100,000 5,000 -95,000 -85,000 11,000 3 6 PLEASE DONT USE EXCEL, PLEASE USE FORMULATION.

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?
A manufacturing firm is choosing between two models of equipment that would lessen labor costs. Machine A has a purchase price of $36,500 and $36,300 for Machine B. You have additional data for repair costs per machine:How much is the savings amount for your chosen alternative if the firm is earning 7% return on its capital
Two alternative machines will produce the same product, but one is capable of higher quality work, which can be expected to return greater revenue. The following are relevant data. Determine which is the better alternative, assuming repeatability and using SL. depreciation, an income-tax rate of 26%, and an after-tax MARR of 11%. Capital investment Life Calculate the AW value for the Machine A AWA(11%) 5 (Round to the nearest dollar) Terminal BV (and MV) Annual receipts Annual expenses Machine A $18,000 11 years $4,000 $157,000 $129,000 Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11% per year. Machine $29,000 6 years 50 $178,000 $164,000
A chemical engineer is considering two styles of pipes for moving distillate from a refinery to the tank farm. A small pipeline will cost less to purchase (inclucding valves and other appurtenances) but will have a high head loss and, therefore, a higher pumping cost. The small pipeline will cost $17 million installed and will have an operating cost of $12,000 per month. A larger-diameter pipeline will cost $21 million installed, but its operating cost will be only $8000 per month. Assume the salvage value is 10% of the first cost for each pipeline at the end of the 10-year study period. Determine the equivalent annual worth of the small pipieline at a MARR of 12% per year compounded monthly. (Answer should be per month)
A manager is trying to decide whether to buy one machine or two. If only one is purchased and demand proves to be excessive, the second machine can be purchased later. Some sales will be lost, however, because the lead time for producing this type of machine is six months. In addition, the cost per machine will be lower if both are purchased at the same time. The probability of low demand is estimated to be 0.20. The after-tax net present value of the benefits from purchasing the two machines together is $80,000 if demand is low and $180,000 if demand is high. If one machine is purchased and demand is low, the net present value is $110,000. If demand is high, the manager has three options. Doing nothing has a net present value of $110,000; subcontracting, $160,000; and buying the second machine, $130,000. a. Choose the correct decision tree for this problem. Note that each payoff is given in thousands of dollars.
2) A manager is trying to decide whether to purchase a certain part or to have it produced internally. Internal production could use either of 2 processes. One would entail a VC of $17 per unit & annual FC of $180k; the other would entail a VC of $15 per unit & annual FC of $230k. Two vendors are willing to provide the part. Vendor A has a price of $30 per unit for any volume up to 50k units. Vendor B has a price of $32 per unit for demand of 5k units or less & $28 per unit for larger quantities. a) If selling price per unit is $45 what is the breakeven point. b) If the manager anticipates an annual volume of 10k units, which alternative would be best from a cost standpoint? c) Which Alternative would entail the highest profit?
To be profitable, a firm must recover its costs. These costs include both its fixed and its variable costs. One way that a firm evaluates at what stage it would recover the invested costs is to calculate how many units or how much in dollar sales is necessary for the firm to earn a profit. Consider the case of Blue Mouse Manufacturers: Blue Mouse Manufacturers is considering a project that will have fixed costs of $10,000,000. The product will be sold for $32.50 per unit, and will incur a variable cost of $11.25 per unit. Given Blue Mouse’s cost structure, it will have to sell units to break even on this project (QBEQBE). Blue Mouse Manufacturers’s marketing sales director doesn’t think that the market for the firm’s goods is big enough to sell enough units to make the company’s target operating profit of $25,000,000. In fact, she believes that the firm will be able to sell only about 150,000 units. However, she also thinks the demand for Blue Mouse Manufacturers’s…
Two different manufacturing processes are being consideredfor making a new product. The first process is less capitalintensive, with fixed costs of only $50,000 per year andvariable costs of $700 per unit. The second process has fixedcosts of $400,000 but has variable costs of only $200 per unit.a. What is the break-even quantity beyond which the secondprocess becomes more attractive than the first?b. If the expected annual sales for the product is 800 units,which process would you choose?
A firm is considering two location alternatives. At location C, fixed costs would be $5,000,000 per year, and variable costs $0.25 per unit. At alternative D, fixed costs would be $4,500,000 per year, with variable costs of $0.35 per unit. If annual demand is expected to be 4.5 million units, which plant offers the lowest total cost? Select one: O a. Plant C, because Plant C is cheaper than Plant D for all volumes. O b. Plant D, because Plant D is cheaper than Plant C for all volumes below 5 million units. Oc. Neither Plant C nor Plant D, because the crossover point is at 4.5 million units. O d. Plant D, because Plant D is cheaper than Plant C for all volumes. Oe. Plant C, because Plant C is cheaper than Plant D for all volumes below 5 million units.
To be profitable, a firm must recover its costs. These costs include both its fixed and its variable costs. One way that a firm evaluates at what stage it would recover the invested costs is to calculate how many units or how much in dollar sales is necessary for the firm to earn a profit. Consider the case of Blue Mouse Manufacturers: Blue Mouse Manufacturers is considering a project that will have fixed costs of $10,000,000. The product will be sold for $37.50 per unit, and will incur a variable cost of $11.25 per unit. Given Blue Mouse’s cost structure, it will have to sell units to break even on this project (QBEQBE).
A company planning to market a new model of motor scooter analyzes the effect of changes in the selling price of the motor scooter, the number of units that will be sold, and the cost of making the motor scooter on the estimated net present value (NPV) of the project. They predict that the break-even point for sales price for the motor scooter is $2,480. What does this mean? O If the motor scooter is sold for $2,480, then the project will make a profit. The net present value (NPV) of the project equals to zero at the sale price of the motor scooter equal to $2,480. O At the price of $2,480, the revenue for the scooter will exactly equal its production cost. O The predicted selling price of the motor scooter is $2,480. O The maximum that the motor scooter can sell for and still make the project have a positive net present value (NPV) is $2,480.
Suppose that Linksys is considering the development of a wireless home networking appliance, called HomeNet, that will provide both the hardware and the software necessary to run an entire home from any Internet connection. Linksys's receivables are 14.2% of sales and its payables are 15.9% of COGS. Forecast the required investment in net working capital for HomeNet assuming that sales and cost of goods sold (COGS) will be as follows: 0 Year Sales COGS 1 $23,574 $9,530 The required investment in net working capital for year 0 is $ The required investment in net working capital for year 1 is $ The required investment in net working capital for year 2 is $ The required investment in net working capital for year 3 is $ The required investment in net working capital for year 4 is $ 2 $26,323 $10,641 3 $23,501 $9,501 (Round to the nearest dollar.) (Round to the nearest dollar.) (Round to the nearest dollar.) (Round to the nearest dollar.) (Round to the nearest dollar.) 4 $8,256 $3,338