Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts: a. What are the profitability indexes of the projects? b. What should Fabulous Fabricators do? HEER a. What are the profitability indexes of the projects? (Round to two decimal places.) The profitability index for contract A is The profitability index for contract B is (Round to two decimal places.) The profitability index for contract C is (Round to two decimal places.) b. What should Fabulous Fabricators do? (Select the best choice below.) O A. Since the NPV of A is the largest, it should choose A. O B. It should take the two projects with the highest profitability indexes: C and A. OC. Since it has the capacity to do both B and C and NPVB + NPVC is greater than NPVA. it should do both B and C. O D. Since the profitability index for C is the largest, it should choose C.

Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts: a. What are the profitability indexes of the projects? b. What should Fabulous Fabricators do? HEER a. What are the profitability indexes of the projects? (Round to two decimal places.) The profitability index for contract A is The profitability index for contract B is (Round to two decimal places.) The profitability index for contract C is (Round to two decimal places.) b. What should Fabulous Fabricators do? (Select the best choice below.) O A. Since the NPV of A is the largest, it should choose A. O B. It should take the two projects with the highest profitability indexes: C and A. OC. Since it has the capacity to do both B and C and NPVB + NPVC is greater than NPVA. it should do both B and C. O D. Since the profitability index for C is the largest, it should choose C.

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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show clearly the calculations for the pay back period for each project
A build to operate (BTO) company signed a contract to operate several industrial wastewater treatments plants for 10 years. The contract will pay the company $2.5 million now and amounts increasing by $200,000 each year through year 10. At an interest rate of 10% per year, what is the present worth of the contract now? Solve using (a) tabulated factors, and (b) a spreadsheet.
Written report with the following content: • Appendix1: Leasing Explain the calculations. Your recommendations Objective: Should FFT lease or construct their own production facility Option 1: Construct Costs to incur: Buying land, construct building and getting ready for use (FFT has these funds available in their bank account today so no mortgage is needed) $ 1,200,000 Taxes, insurance, and repairs (per year) $110,000 Intended years of use 15 Projected market value in 15 years $ 1,250,000 Option 2: Lease Intended years of use 15 Deposit required today (this deposit will be returned to FFT when the lease contract is complete is 15 years) $ 100,000 Annual lease payment $ 160,000 Property taxes (annual) to be paid by FFT $ 15,000 Insurance (annual) to be paid by FFT $ 15,000 Required rate of return 8% Methodology: The consulting team is proposing to perform a NPV analysis and determine the benefit to leasing or construction. Based on the analysis, they will recommend the preferred option…
Scenario 2: Bremily Firewood Company is expanding their operations. The company has an expansion budget of $1,000,000 to use for contracting with local land owners. The company can contract with one, multiple, or zero local land owners. Assume the company has a MARR of 10% per year. 2C. Use the following information to determine which land parcels Bremily should contract with. Assume there is only one of each land parcel available and each parcel has an expected life of 6 years. Land Parcel Initial Owner Net Present Value Cost Peterson $564,000 $473,000 Johnson $475,000 $351,000 Smith $268,000 $194,000 Jefferson $832,000 $609,000 What is the best land parcel, or combination of land parcels, for Bremily Company to contract with? Note: Enter you answer as the number of each parcel (0 or 1) the company should choose.
GeoWorld Systems uses a subset of the following questions during the interview process for new engineers. For each of the following cases, determine if “the project” or “do nothing” is preferred. The value of MARR in each case is 14%.
Two roadway design are under consideration. Design 1A will cost $3 million to build and $100,000 per year to maintain. Design 1B will cost $3.5 million to build and $40,000 per year to maintain. Both designs are assumed to be permanent. Use an AW based rate of return equation to determine (a) the breakeven ROR, and (b) which design is preferred at a MARR of 10% per year
Solve c) What is the payback period (PB) for this project?
please answer number 14:bes 221-engineering economics. please give detailed and correct answers. I will report to bartleby thos tutors who will give incorrect answers.
You are an employee of University Consultants, Limited, and have been given the following assignment. You are to present an investment analysis of a small retail income-producing property for sale to a potential investor. The asking price for the property is $1,360,000; rents are estimated at $174,080 during the first year and are expected to grow at 2.5 percent per year thereafter. Vacancies and collection losses are expected to be 10 percent of rents. Operating expenses will be 35 percent of effective gross income. A fully amortizing 70 percent loan can be obtained at 6 percent interest for 30 years (total annual payments will be monthly payments × 12). The property is expected to appreciate in value at 3 percent per year and is expected to be owned for five years and then sold. Required: a. What is the first-year debt coverage ratio? b. What is the terminal capitalization rate? c. What is the investor’s expected before-tax internal rate of return on equity invested (BTIRR)? d.…
Q2- Your local foundry is adding a new furnace. There are two different styles and types of furnaces, so the foundry must select from among a set of mutually exclusive alternatives. Initial capital investment and annual revenues for each alternative are given in the Table2 below. None have any market value at the end of its useful life. The useful life of each furnace is 10 years, and the MARR is 15%. a) Using the incremental analysis procedures, which furnace should be chosen? [Fill in the required results in Table 5 and Table 6 below]. No need to use Excel. b) Discuss how your proposed choice in part a might affect the economic, environmental and social context? Table 2: Mutually Exclusive Alternatives Cash flows Furnaces F1 F2 Capital Investment ($) Total Annual Revenues ($) 110000 125000 53800 54625
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