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- 1 Uniform Annual Cash Flow An engineer has an Huct uating fut ure budget for the maint enance of a particular machine. During cach of the first 5 years, $10,000 per year will he budget ed. During the second 5 years, the annual budget will be $15,000 per year. In addition, $5000 will be budgeted for an overhaul (major repair) of the machine at end of the 4th year, and again at the end of the 8th year. What uniform annual expenditure (EUAC) would be equivalent, if interest rate is 8% per year?A company is setting up a project to buld housing Units in which the investment volume is estimated at ane million dollars to build (100 houses), the price of the house is (20,000) dollars, to be paid in equal installiments for a periad of (4 years), the annual Costs are estimated at (50) thousand dollars. Calculate the Simple rate of returm, the payoack period and the internal rate of retum for the project, bearing in mind that the lowest discount hiahest is (12'%). Will the project be accepted or rejected. rate is (8b) and theReq#2: Use Aw analysis to find the best alternative for your company starting one of the following projects. Your company MARR is 9.1 %. Draw the cashflow diagram. Projects data First cost, $ Annual cost, $/year Annual revenue, $/year Life, years Project-1 -85,000 -23, 100 54,000 5 I Project-2 -135,000 -11,000 55, 100 10 Project-3 -77,000 -21, 100 37, 100 5 Project-4 -90,000 -26, 100 47, 100 5
- QUESTION 5 For the below ME alternatives , which machine should be selected based on the PW analysis. MARR=10%. Machine A Machine B Machine C First cost, $ 15000 30000 12,358 Annual cost, $/year 19,219 6,000 4,000 Salvage value, $ Life, years 4,000 5,000 1,000 Answer the below questions : C- PW for machine C =You are given the cash flow series for two projects, Alt. A and Alt. B. YEAR 1 2 3 4 5 6 Alt. A - F1 X X X + S1 Alt. B - F2 Y Y Y Y Y Y + S2 Assume that F2 > F1, and X, Y, S1, and S2 are positive; the incremental rate of return (i*) on the additional investment in Alt. B can be calculated with the following expression: = - = - = - · F2 + Y (P/A, i*, 6) + S2(P/F, i*, 6) (F2 F1) + (Y - X)(P/A, i*, 5) + (S2 - S1)(P/F, i*, 6) (F2 F1)(F/P, i*, 6) + (Y - X)(F/A, i*, 6) + (S2 - S1) (F2 F1)+(Y - X) + (Y + S2) - (X + S1) 0 = (F1 F2)(F/P, i*, 6) + (X - Y)(F/A, i*, 6) + (S2-S1) == 0 = F1 + X(P/A, i*, 6) + S1(P/F, i*, 6) 0F2+Y(P/A, i*, 6) + S2(P/F, i*, 6) 0 = - 0 = - F1 + X(P/A, i*, 5) + S1(P/F, i*, 6) F2+ Y(P/A, i*, 5) + S2(P/F, i*, 6)Consider your self as a businessman, you owned 5 storey building with a total of 35-unit apartment near at the downtown area of Davao City. You felt that because the location of the apartment will be occupied 95% at all time. You desires a rate of return 30%. Other pertinent data are the following: Land investment - 8,000,000.00 Building investment - 20,000,000.00 Study period - 30 yrs Cost of the land after 30 yrs - 25,000,000.00 Cost of the building after 30 yrs - 5,000,000.00 Rent per unit per month - 7,500.00 Upkeep per unit per year - 1,500.00 Property Taxes - 1% Insurance - 0.5% Is this a good investment? And what is the Payback period of investment? Note: use all the method.
- The city council of Morristown is considering the purchase of one new fire truck. The options are Truck X and Truck Y. The purchase is to be financed by money borowed at 10% per year. Which fire truck should be purchased? The appropriate financial data are as follows: Truck X Truck Y Capital Investment $53000 S69000 Maintenance cost per year $5000 $5500 Useful life 5 years 5 years Reduction in fire damage per $19000 $20000 year Your answer: O Truck X O Neither Truck X nor Truck Y O Truck YA company is planning to expand its production operations, it has two alternatives which has the cash flow as reresent in the table below, suggest the best project using the Equivalent annual worth method if you know pw that the interset rate is 14%. NW Detail Equipments cost (CU) 2 200 000 1 900 000 Project 1 Project 2 Instalation LURD cost (CU) 400 000 300 000 Revenue (CU/Year) 400 000 620 000 Expense (CU/Year) 100 000 150 000 Salvage value (CU) 300 000 500 000 Life (Year) 8 32. Only one of three different machines is to be purchased for a certain production process. An engineer performed the following analyses to select the best machine. All machines are assumed to have a 10-year life. Which machine, if any, should the company select if its MARR is 20% per year? 1 3 Initial cost, S Annual cost, S/year Annual savings, S/year ROR, % -44,000 -70,000 80,000 -72,000 -60,000 -64,000 +80,000 23.4 -61,000 +80,000 23.1 18.6
- Buying Equipment 1 from XYZ company and company ABC will give the production similar productivity input of 400,000.00 per year. The equipment from company XYZ has a purchase price of 200,000.00, annual maintenance of 5,000.00, and production life of 10 years, while the equipment from company ABC has a purchase price of 100,000.00, annual maintenance of 2,000.00, and production life of 12. Using present worth method, what is the present values of their purchase profit? Use MARR of 20%Buying Equipment 1 from XYZ company and company ABC will give the production similar productivity input of 400,000.00 per year. The equipment from company XYZ has a purchase price of 200,000.00, annual maintenance of 5,000.00, and production life of 10 years, while the equipment from company ABC has a purchase price of 100,000.00, annual maintenance of 2,000.00, and production life of 12. Using present worth method, what is the total present worth of each alternatives? Use MARR of 20%For the project with cash flow given below find the most sensitive factor among annual benefit, annual cost and salvage value if the changes by ±20%. Initial investment Annual revenue Annual Cost Salvage Value MARR Life in years Project Rs.2,00,000 Rs.1,00,000 Rs. 40,000 Rs. 50,000 10% 5