The product development group of a high-tech electronics company developed five proposals for new products. The company wantsto expand its product offerings, so it will undertake all projects that are economically attractive at the company's MARR of 11% per year.The cash flows (in $1000 units) associated with each project are estimated. Which projects, if any, should the company accept on thebasis of a present worth analysis?ProjectInitial InvestmentOperating Cost, per YearRevenue, per YearSalvage ValueLifeB$-510$-120AE$-1,250$-650$-550$-280$500SO5 years$-400$-60$-820$-250$475$103 years$400$2210 years$725$708 years$525$704 yearsThe present worth of project A is $The present worth of project B is $|The present worth of project C is $[The present worth of project D is $[The present worth of project E is $[Project A is (Click to select) ♥Project B is (Click to select) ♥Project C is (Click to select)*Project D is [(Click to selact) ♥Project E is (Click to select)

Net present value (NPV) can be defined as a difference between this value of cash inflows and…

Answered: The product development group of a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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Problem 1QTC

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Concurris Prototyping is committed to using the newest and finest equipment in its labs. Accordingly, Wilma, a senior engineer, has recommended that a 2-year-old piece of precision measurement equipment be replaced immediately. She believes it can be demonstrated that the proposed equipment is economically advantageous at a 15%-per year return and a planning horizon of 5 years. Perform the replacement analysis using the annual worth method, a 5-year study period, and the estimates below. Was Wilma correct? Equipment Original purchase price, $ Current market value, $ Remaining life, years Estimated value in 5 years, $ Salvage value after 15 years, $ AOC, $ per year Current -30,000 15,000 5 7,000 -11,000 The AW of the defender is $- challenger is $- Wilma ((Click to select)) correct. Proposed -40,000 -- 15 10,000 5,000 -3,000 and the AW of the
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The capitalized cost (CC) of the given project whose Cash Flow diagram is given below is closest to: = 10% per year 5 6 7 8 9 10 11 2 3 A= $2,000 PO=S30,000 C-55000 (Recurring every 5 y ears) C=55000 (Recurring every 5 years) Captalized Cost= ?
Street cost 25 M now and 2 M annual maintenance. At i=10%, what is the capitalized cost?
The following five alternatives that are evaluated by the rate of return method, If the alternatives are independent and the MARR is 15% per year, the onels) to select is (are) Incremental ROR, N. When Compared with Alternative Initial Investment,S Alternative Alternative A BC DE 10.6 27.3 194 353 25.0 -25,000 -35,000 13.1 38.5 24.4 -40,000 13.4 46.5 27.3 26.8 -60,000 25.4 -75,000 20.2 Only D O Only D and E O Only A D, and E O Only E
The prospective exploration for oil in the outer continental shelf by a small, independent drilling company has produced a rather curious pattern of cash flows as follows: EOY Net Cash Flow -$520,000 1-10 $200,000 10 -$1,500,000 The $1,500,000 expenses at EOY 10 will be incurred by the company in dismantling the drilling rig. Customarily, the company expects to earn at least 20% per year on invested capital before taxes. Complete the compounding factors below to determine the ERR. (-520000-1500000( ,20%, 10) ,i%, 10) = 200000(F/ ,20%,10)) (
Avian Air Cargo is considering an investment of $10,000,000 with life expectancy of 10 years and annual operating cost of $400,000 in Year 1 with an $50,000 per year starting in Year 2 through the life of the project. Avian Air Cargo anticipates a revenue stream of $2,500,000 per year for 20 years I 12%, what is the rate of return for this project and is it economically justified? It is NOT economically justified because the rate of return is between 14% and 15%. It IS economically justified because the rate of return is between 10% and 11%. It is NOT economically justified because the rate of return is between 10% and 11%. It IS economically justified because the rate of return is between 14% and 15% of MARR
A future worth (computed at the MARR) less than zero for a project guarantees that interest in excess of the MARR has been realized by the project Select one: True O False
E4 An engineer at Delphi Systems is considering the projects below, all of which can be considered to last indefi nitely. The company’s MARR is 13% per year. (a) Determine which projects should be selected on the basis of IROR if the budget limitation is $39,000. (b) What is the overall rate of return if the money not invested in projects is assumed to earn a rate of return equal to the MARR?
Annual Worth Analysis - 3 A* The AW values of three revenue alternatives are $ 30,000 for A. $ 40,000 for B, and $ 55,000 for C. On the basis of these AW values, the correct decision is to: (a) select alternative A (b). select alternative B. (c) select alternative C (d). select the do-nothing alternative.
Three mutually exclusive electric-vehicle battery systems are being investigated by a large automobile manufacturer. Pertinent data are given below: Solve, a. Use the PW method to select the best battery system. The MARR is 15% per year, and the system chosen must provide service for 10 years. Assume repeatability. b. Confirm your recommendation in Part (a) using the IRR method.
Select the best option using Rate of Return Analysis (incremental Rate of Return) \table[[MARR, 20%,,,], [Useful Life, 5 years,,,], [Brand, D1, D2, D3, D4]] \table[[\table[[Capital], [Investment]], $100,00, $140, 600, $148, 200, $122,000. Solve using excel spreadsheet. ف c 3. Select the best option using Rate of Return Analysis (incremental Rate of Return) MARR Useful Life Brand 20% 5 years D1 D2 D3 D4 Capital $100,00. $140,600 $148,200 $122,000 Investment Annual Expenses $29,000 $16,900 $14,800 $22,100 Salvage $10,000 $14,000 $25,600 $14,000

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