A project being consider by a local government has the following estimated benefit – cost data $1000 investment for the first 2 years and then recurring cost of $5000 for the coming 2 years and $8000 for year 5& 6 respectively. Also there are benefits of $20,000, $30,000, $ 30,000 and $20,000 starting from the third year. Consider the

A project being consider by a local government has the following estimated benefit – cost data $1000 investment for the first 2 years and then recurring cost of $5000 for the coming 2 years and $8000 for year 5& 6 respectively. Also there are benefits of $20,000, $30,000, $ 30,000 and $20,000 starting from the third year. Consider the

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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A certain masonry dam requires 200,000 m³ of gravel for its construction. The contractor found two possible sources for the gravel with the following data: Source A Source B Average distance, gravel pit to dam site 3 km 1.2 km Gravel cost/m³ at pit ➖➖➖➖➖ P10 Purchase price of pit P800,000 Road construction necessary P450,000 Overburden to be removed at P4.20/m³ 90,000m³ ➖➖➖➖➖➖ Hauling cost/m³/km P4 P4 What is the Total Cost of Source A
A. An NGO is considering building a school for children in a community with 200 children. Assume that currently, only 83 children attend school. Analysts have estimated that the new school will double school attendance to 166 children. Also, assume that the present social value of each child attending school is $2,000. If the project requires an initial investment of $50k plus an additional $15k per year after the first year until it is completed, and if it takes 4 years to complete, what is its SNPV at a PDR of 7%? Assume that the construction imposes a negative externally of $7k a year due to noise and pollution. Also assume that the benefits start in the 5th year. B. Calculate the SIRR for the above project. C. Explain, why a child attending school has social value
The data provided by a company for the year 2021 - 2022 to carry out Break Even Analysis. Provide the results, complete analysis and suggestions. The data is as follows: The fixed cost of the year is 80000.0 R.O The estimated sales are 400000.0 R.O Material Cost / unit 10.0 R.O Production cost / unit 1S 20.0 R.O Transportation & other Misc Cost / unit (Approx) 5.00 R.O Marketing and advertisement cost / unit 3 R.O Each unit is sold at price 50.0 R.O 1. Construct the B.E.P chart on a graph sheet and indicate, B.B.P, M.o.s. 2. Indicate B.E.P & M.o.S after the improvement measures has been taken (With different colours). 3. Determine the profit before and after the measures taken.
It refers to the number of years that the original capital investment for the project will take to be paid by its annual earnings O A. Profitability Index O B. Payback Period O C. Rate of Return O D. MARR
T0I Ahswer:/vears inu I The maintenance cost of a certain machine is zero the first year and increases by $200 per year for each year thereafter. The machine cost $2,000 and has no salvage value at any time. Its annual operating cost is $1,000 per year. If the
Production capacity of neck process. There are two alternatives, a and B. The annual fixed cost of scheme a is US $40000 and that of scheme B is US $30000; the unit variable cost of scheme a is US $10 / piece and that of scheme B is US $11 / piece. Revenue can be realized for each piece 15 $ 1Calculate the break even point of the two schemes. 2What kind of output can the two schemes achieve the same profit? 3) If the annual demand is expected to be 12000 units, which option can achieve higher profits?
A certain masonry dam requires 500,000 cu.m. of gravel for its construction. The contractor found two possible sources for the gravel with the following data: Source A Source B 1.0 km Average distance, gravel pit to dam 4.0 km site Gravel cost/cu.m. at pit Purchase price of pit Road construction necessary Overburden to be removed at P50.00/cu.m. Hauling cost per cu.m. per km P415.00 ------- P800,000.00 P450,000.00 None 80,000 cu.m. P7.00 P7.00 Which of the two sites will give lesser cost?
Amazing Airlines has the following customer metrics: Average customer relationship length: 8 years Average number of flights per customer per year: 2.5 Average cost per ticket: $600 Profit margin per customer: 8% The net CLV for Amazing Airlines is closest to? O $18,000 $960 $1260 O $12,000
The ore of a gold mine in the province contains, on average, 0.5 ounce of gold per ton. Method A ofprocessing costs 150Php/ton and recovers 93% of the gold, while Method B costs only 120Php/tonand recovers 81% of the gold. If gold can be sold at 1,200/ounce, which method is better and by howmuch?a. Method A, by 43Phpb. Method A, by 42Phpc. Method B, by 42Phpd. Method B, by 43Php
The following projects listed in TABLE Q48 are being considered by Muhibbah Fabrication Company for allocation of its annual capital budget. While many worthy projects are available, the money available is limited. All projects have a 5-year life and are acceptable at a 10% interest rate. TABLE Q48: List of available projects to fund Project First Cost (RM) Net Annual Benefits PW (10%) (RM) (RM) 3,200 2,131 6,000 2,745 5,000 2,000 A B C D 10,000 20,000 A. B. C. D. 15,000 5,000 3,954 2,582 A B C D C B D A B C A D B-A-C-D Use this information, answer Q48 through Q50: 48. Rank the projects in descending order (best to worst) using PW at an interest rate of 10%. IRR (%) 49. Rank the projects in descending order (best to worst) based on IRR. A. B C A-D B. B A C D C. D→C-A-B D. D-B-C-A 18.03 15.24 19.86 28.65 50. If there is only RM30,000 allocated for capital budget, determine the MARR applicable for the funded projects. A. 28.65% B. 19.86% C. 18.03% D. 15.24%
3. PEMEX, Mexico's petroleum corporation, has an estimated budget for oil and gas exploration that includes equipment for three offshore platforms as shown. Use the PW to select the best alternative at a MARR of 14% per year. Platform X Y Ꮓ Initial Cost, $ million 300 450 510 M&O, $ million per year 320 290 230 Salvage Value, $ million 75 50 90 Estimated Life, years 20 20 20
1. A pharmaceutical company that manufactures ascorbic acid tablets is investigating two production options that have the estimated cash flows shown ($10 million units). Which one should be selected based on a present worth analysis (in million units) at 10% per year? In- outsourced house Initial Investment -30 Annual cost, $ per year 24 -5 -2 Annual Revenue, $ per 13 year 2 N/A Salvage Value, $ Life