ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Helparrow_forwardOnly typing solution requiredarrow_forwardYou are considering renovating your small business into an even smaller business. You currently earn $50,000 per year from your business. It would cost $100,000 to renovate. You are not sure how successful the new venture will be. You paid $500 for a market report which told you that you have an equal chance of earning $100,000 per year or $40,000 per year, starting in 2 years (meaning at time 2). You plan to operate the business for 10 years, regardless of renovations. You have an interest rate of 2% annually What is the NPV of the project?arrow_forward
- If prices are calculated with a 35% mark-up based on cost, what is the percent that those prices should be marked down to get back to their original cost? Support the answer with appropriate computations.arrow_forwardFollowing a successful meeting with a potential investor, you have been granted enough capital to kick start your start-up company, which has developed mobile applications that instantly compares retail prices for corresponding retail outlets across a specific location. Your company sells each application for P20. The variable cost per application is P5. The company's total fixed costs is P210,000. Calculate the break even point (Insert your answer to the nearest whole number, with no units).arrow_forwardHollygan Co. must choose between gas-powered and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the firm will choose only one. (They are mutually exclusive investments.) The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $110,000, whereas the gas powered truck will cost $40,000. The required rate of return that applies to both investments is 14 percent. The life for both types of truck is estimated be 12 years, during which time the net cash flows for the electric-powered truck will be $23,500 per year and those for gas-powered truck will be $10,000 per year. Calculate the NPV and IRR for each type of truck, and decide which to recommend. (Written work shown please)arrow_forward
- In a building construction project, 7,500 feet of insulated ductwork is required. The ductwork is made from 14-gauge steel costing $8.50 per pound. The 24-inch-diameter duct weighs 15 pounds per foot. Insulation for the ductwork costs $10 per foot. Engineering design will cost $16,000, and labor to install the ductwork will amount to $180,000. What is the cost of the 14-gauge steel? $956,250 $887,456 $1,200,000 $1,000,000arrow_forward9arrow_forwardSusan Jones has a job as a pharmacist earning $45,000 per year, and she is deciding whether to take another job as the manager of another pharmacy for $55,000 per year or to purchase a pharmacy that generates revenue of $350,000 per year. To purchase the pharmacy, Susan would have to use her $20,000 savings and borrow another $90,000 at an interest rate of 8% per year. The pharmacy that Susan is contemplating purchasing has additional expenses of $100,000 for prescription and non-prescription drugs and lines of women’s and men’s personal hygiene products and cosmetics; $45,000 for one full time person; $20,000 for one part time person; $12,000 for rent; $2,500 for electricity; $1,300 for natural gas; $1,200 for telecommunications; and depreciation and amortization expenses are $5,500. Assume that income and business taxes are 35% and the repayment of the principal of the loan does not start before three years. Also assume that revenue is expected to grow at 5% per year and expenses at…arrow_forward
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