GSU Motor Works needs to select an assembly line for producing their new SUV. They have two options: • Option XYZ is a highly automated assembly line that has a large up-front cost but low maintenance cost over the years. This option will cost $114 million today with a yearly operating cost of $40 million. The assembly line will last for 6 years and be sold for $48 million in 6 years. • Option GHI is a cheaper alternative with less technology, a longer life, but higher operating costs. This option will cost $168 million today with an annual operating cost of $32 million. This assembly line will last for 10 years and be sold for $23 million in 10 years. The firm’s cost of capital is 16%. Assume a tax rate of zero percent. The equivalent annual cost (EAC) for Option XYZ is $_______ million. The equivalent annual cost (EAC) for Option GHI is $_______ million.

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)

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Perot Corporation is developing a new CPU chip based on a new type of technology. Its new chip, the Patay2 chip, will take two years to develop. However, because other chip manufacturers will be able to copy the technology, it will have a market life of two years after it is introduced. Perot expects to be able to price the chip higher in the i rst year, and it anticipates a signii cant production cost reduction after the i rst year as well. The relevant information for developing and selling the Patay2 is given below.                                                              Patay2 Chip Product EstimatesDevelopment Cost                                                                                 $20,000,000Pilot Testing                                                                                              $5,000,000Debug                                                                                                           $3,000,000Ramp-up Cost…

You are trying to pick the least-expensive equipment for your manufacturing operations. You have two choices: the Hi-Quality, which will cost $40,000 to purchase and which will have OCF of -$2,000 annually throughout the equipment’s expected life of 5 years; and Lo-Budget, which will cost $20,000 to purchase and which will have OCF of -$5,000 annually throughout that vehicles expected three-year life. Both pieces of equipment will be worthless at the end of their life. If you intend to replace whichever type of equipment you choose with the same thing when its life runs out, again and again out into the foreseeable future. Your business has a cost of capital of 10 percent. One iteration of each delivery equipment will consist of the following cash flows: Year  0  1  2  3  4  5  Hi-Quality CFs  -$40,000  -$2,000  -$2,000  -$2,000  -$2,000  -$2,000  Lo-Budget CFs  -$20,000  -$5,000  -$5,000  -$5,000

You are evaluating a project for The Farstroke golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Farstroke to be $490 per unit and sales volume to be 1,200 units in year 1; 1,125 units in year 2; and 1,000 units in year 3. The project has a 3-year life. Variable costs amount to $270 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $138,000 in assets, which can be depreciated using bonus depreciation. The actual market value of these assets at the end of year 3 is expected to be $26,000. NWC requirements at the beginning of each year will be approximately 30 percent of the projected sales during the coming year. The tax rate is 21 percent and the required return on the project is 11 percent. What is the operating cash flow for the project in year 2? Note: Enter your answer as a whole number. Operating cash flow

What is the OCF?

You are evaluating a project for The Farstroke golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Farstroke to be $400 per unit and sales volume to be 1,000 units in year 1; 1,500 units in year 2; and 1,325 units in year 3. The project has a 3-year life. Variable costs amount to $225 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $165,000 in assets, which can be depreciated using bonus depreciation. The actual market value of these assets at the end of year 3 is expected to be $35,000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. The tax rate is 21 percent and the required return on the project is 10 percent. What change in NWC occurs at the end of year 1?

Ruff Motors needs to select an assembly line for producing their new SUV. They have two options:• Option A is a highly automated assembly line that has a large up-front cost but low maintenancecost over the years. This option will cost $8 million today with a yearly operating cost of $2 million.The assembly line will last for 5 years and be sold for $5 million in 5 years.• Option B is a cheaper alternative with less technology, a longer life, but higher operating costs.This option will cost $7 million today with an annual operating cost of $2.5 million. This assemblyline will last for 8 years and be sold for $1 million in 8 years.The firm’s cost of capital is 12%. Assume a tax rate of zero percent.The equivalent annual cost (EAC) for Option A is $_______ million.The equivalent annual cost (EAC) for Option B is $_______ million.

You are evaluating a project for The Farstroke golf club, guaranteed to correct that nasty slice. You estimate the sales price of The Farstroke to be $450 per unit and sales volume to be 1,200 units in year 1; 1,325 units in year 2; and 1,000 units in year 3. The project has a 3-year life. Variable costs amount to $250 per unit and fixed costs are $100,000 per year. The project requires an initial investment of $150,000 in assets, which can be depreciated using bonus depreciation. The actual market value of these assets at the end of year 3 is expected to be $30,000. NWC requirements at the beginning of each year will be approximately 20 percent of the projected sales during the coming year. The tax rate is 21 percent and the required return on the project is 10 percent. What is the operating cash flow for the project in year 2? Note: Enter your answer as a whole number. Operating cash flow