Problem 2Consider the following sets of investment projectsn(years)A($)B($)C($)D($)0-3,500-5,800-5,200-40,00016003,0002,00012,00026002,0004,00014,00031,0001,0002,00018,00041,0005004,00018,00051,0005002,00014,000Compute the equivalent annual worth of each project at i-10% and determine theacceptability of each project.

The objective of this question is to calculate the equivalent annual worth (EAW) of each project and…

Answered: Problem 2 Consider the following sets…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In an country at zero disposable income , consumption is 1200 million .The marginal propensity to save in this economy is 0.25 . What is saving in this economy at Yd = 6000 million ? (a) -1200 (b) 300 (c) 1200 (d) -300
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2-17 Consider the accompanying breakeven graph for an investment, and answer the following questions. $40 $35 $30 Total Revenue $25 $20- Total Cost $15 $10 -- $5 $0 0. 250 500 750 1000 1250 1500 1750 Output (units/year) (a) Give the equation for total revenue for x units per year. (b) Give the equation for total costs for x units per year. (c) What is the "breakeven" level of x? :11 ou hove a Dollars (X104)
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A firm is considering the development of several new products. The products under consideration are listed here; the products in each project group are mutually exclusive. Project group Products Development costs (P) Net annual cash flow (P) A A1 500,000 90,000 A2 650,000 110,000 A3 700,000 115,000 B B1 600,000 105,000 B2 675,000 112,000 C C1 800,000 150,000 C2 1,000,000 175,000 At most one product from each group will be selected. The firm has MARR of 10% per year and a capital investment budget limitation on development costs of P2,100,000. the life of all products is assumed to be ten (10) years. Assume no market values at the end of 10 years.
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Use the following information to answer questions 1 to 5. A firm is deciding whether or not to enter a new market. The decision tree for the firm is provided below. The prompt below the decision tree explains how the decision tree was created. Enter Do Not Enter Allowed 0.9 Denied 0.1 3 Research No Research Good 0.7 Bad 0.3 5 6 Produce Sell Produce Sell Produce Sell 8 9 10 High 0.75 Low 0.25 High 0.25 Low 0.75 High 0.6 Low 0.4 Profit (5000s) 1200 -800 -200 1200 -800 -200 1400 -600 0 -100 0 At node 1, the firm must decide whether to enter the new market or not. The cost of attempting to enter is $100,000. The upper branch from node 2 shows that the firm has a 0.9 probability of being allowed to enter the market. If the firm is allowed to enter, it will have to pay $1,500,000 to buy the facilities required to become a part of the market. Node 3 shows that the firm will then consider doing a research study to forecast demand for their new product prior to beginning production. The cost of…
Period n Project A Project B Project C Project D -$1,300 $1,000 $1,00 $1,000 1 -$800 $2,900 $1,000 -$450 $400 $1,030 -$550 -$450 3 $900 $3,005 $450 $450 4 $1,700 -$5,200 -$650 5 $2,000 -$545 -$450 What type of investment are the above projects? How many i" values are there for each project? Investment Type Project A Project B Project C Project D Simple Investment Simple Borrowing Nonsimple Investment Number of i* values
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