a river. The estimated cost and benefits are listed below. (i) If a 6% per year rate applies and dam life is infinite for analysis purpose, select the one best location using the B/C method. If no site is acceptable, other sites will be determined later. (ii) If more than one dam site can be selected, which sites are acceptable, using B/C method?

a river. The estimated cost and benefits are listed below. (i) If a 6% per year rate applies and dam life is infinite for analysis purpose, select the one best location using the B/C method. If no site is acceptable, other sites will be determined later. (ii) If more than one dam site can be selected, which sites are acceptable, using B/C method?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The Army Corps of Engineers wants to construct a dam on a flood-prone river. The estimated construction cost and average annual dollar benefits are listed below. A 6% per year rate applies and dam life is infinite for analysis purposes. (a) Select the one best location using the B/C method. (b) If the sites are now considered independent projects, which sites are acceptable?
Water supply for an irrigation system can be obtained from a stream in some nearby mountains. Two alternatives are being considered, both of which have essentially infinite lives, provided proper maintenance is performed. The first is a concrete reservioir with a steel pipe system and the second is an earthen dam with a wooden aqueduct. Below are the costs associated with each. Compare the present worths of the two alternatives, using an interest rate of 8%. Which alternative should be chosen {Perform all calculations using 5 significant figures and round any monetary answers to the nearest dollar}? Concrete Reservoir 550,000 2,250 N/A First Cost [dollars] Annual Maintenance Costs [dollars] Replacing the wood portion of the aqueduct each 15 years The cost Concrete Reservoir is (in PW dollars): Earthen Dam 230,000 15,000 120,000 Number The cost of the Earthen Dam plus Aqueduct is (in PW dollars): Number Which alternative should be chosen (enter either 'Reservoir' or 'Dam'?
The Water Regulatory Agency is considering five mutually exclusive alternatives for providing a sewage-treatment facility. The annual equivalent costs and estimated benefits of the alternatives are as follows: Using the problem above, which plan, if any, should be adopted if the Water Regulatory Agency wishes to invest if, and only if, the B–C ratio is at least 1.0? Use AW.
A new storm drainage system must be constructed right away to reduce periodic flooding that occurs in a city that is in a valley. Five mutually exclusive designs have been proposed, and their present worth (in thousands of dollars) of costs and benefits are the following. Solve, a. Which system has the greatest B–C ratio? b. Which system has the largest incremental B–C ratio(based on differences between alternatives)? c. Which system should be chosen ?
SHOW ME HOW TO DO IT IN EXCEL (SHOW THE FUNCTIONS USED AND HOW YOU USED THEM) + CLERLY SHOW INPUTS AND OUTPUTS. Yakima Racks is evaluating two alternatives, mutually exclusive methods for a new kayak carrier frame. It has developed the following estimated after-tax cost savings for each alternative method. Project managers require an appropriately applied IRR methodology for their decisions. If the project discount rate is 11%, and the cash flows are those noted below, which method would you recommend? Provide results for both traditional NPV analysis and an appropriately applied IRR analysis. Explain your recommendation fully on your worksheet. Show all cash flows and related analyses. Clearly specify your recommendation and reasoning clearly on your worksheet. A: Titanium Pully CFs: T0=(115,000), T1=1,000; T2=5,000; T3=25,000; T4=45,000; T5=100,000 B: Metal Hook CFs: T0=(95,000), T1=45,000; T2=35,000; T3=30,000; T4=20,000; T5=10,000 THEN, ANSWER THIS QUESTION CHOOSE FROM…
(a) Calculate the, the Payback Period, and the net Present Value of for each project.b) For each of the above methods of project appraisal recommend which project should be taken up.c) Using all the information gathered from the above techniques which project would you recommend giving the reasons for this decision.d) Explain the uses, limitations and merits of the Payback Period compared to Net Present Value in investment appraisal.
A new storm drainage system must be constructed right away to reduce periodic flooding that occurs in a city that is in a valley. Five mutually exclusive designs have been proposed, and their present worth (in thousands of dollars) of costs and benefits are the following. a. Which system has the greatest B-C ratio? b. Which system has the largest incremental B-C ratio (based on differences between alternatives)? c. Which system should be chosen? System 1 2 3 4 5 PW of $800 $5,000 $5,000 $12,000 $11,000 costs PW of 6,000 14,000 6,000 22,000 18,000 benefits a. System v has the greatest B-C ratio, which is (Round to two decimal places.)
Assume a project has three variables: life, first cost, and annual cost. Assume there is no salvage value. For each variable there are three possible values as listed below. The firm uses an interest rate of 8 percent to evaluate engineering projects. For each variable, determine which value is "optimistic" and which is "pessimistic". The remaining value is "most likely". Compute each variable's estimated mean (using the "optimistic/most likely/pessimistic" formula) and using those computed mean values, compute the project's expected present value cost. First cost: -$480,000, -$620,000, -$860,000 Annual cost: -$75,000, -$85,000, -$110,000 Life: 8 years, 10 years, 24 years What is Expected Net Present Worth?
DuraTech Manufacturing is evaluating a process improvement project. The estimated receipts and disbursements associated with the project are shown below. MARR is 6%/yr. Solve, a. What is the internal rate of return of this investment? b. What is the decision rule for judging the attractiveness of investments based on internal rate of return? c. Should DuraTech implement the proposed process improvement?
Determine which equipment should be favored, comparing the net present values of the two proposals and assuming a minimum rate of return of 15%. Use the present value table appearing above. Processing Mill Electric Shovel EE Present value of net cash flow total Less amount to be invested Net present value Which project should be favored?
Assume that there are two competing projects, A and B. Project A has an NPV of $1,000 and an IRR of 15%. Project B has an NPV of $800 and an IRR of 20%. Which of the following is true? Project A should be chosen because it has a higher NPV Project B should be chosen because it has a higher IRR It is not possible to us NPV or IRR to choose between the two projects Neither projects should be chosen All of these
A certain project has MARR= 15% . Ali is the project manager and wants to select the best appropriate alternative among alternative A with i* = 12% , and alternative B with i*= 12% . Which is the best alternative to consider? Select one: a. do nothing alternative b. both alternatives are accepted C. alternative A d. alternative B

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