Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 12, Problem 24P
(a):
To determine
Calculate the expected mean.
(b):
To determine
Selection of the project.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
There have been several variances in the cost and schedule estimates on your project, and the original estimating assumptions are no longer valid. The variances will likely continue until the end of the project. Calculate the SPI.
BAC = $1,000,000
EV = $200,000
PV = $4000,000
AV = $150,000
a.
0.2
b.
0.5
c.
1.333
d.
1
Chemitronix Ltd. is a microchips manufacturing company. It was found that the business is at the maturity stage, demanding some
change. After rigorous research, management came up with the following decision variables
Expansion: 45% chance of gaining 1,500,000; 55% chance of losing X
New Product: 50% chance of gaining 900,000; 50% chance of losing 576354
What must have been the value of expansion loss if expansion and new product will result to the same expected monetary values?
If s is the standard deviation of a project with expected returns R, the coefficient of variation is:
Chapter 12 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 12 - Prob. 1PCh. 12 - Prob. 2PCh. 12 - Prob. 3PCh. 12 - Prob. 4PCh. 12 - Prob. 5PCh. 12 - Prob. 7PCh. 12 - Prob. 8PCh. 12 - Prob. 9PCh. 12 - Prob. 10PCh. 12 - Prob. 11P
Ch. 12 - Prob. 12PCh. 12 - Prob. 13PCh. 12 - Prob. 14PCh. 12 - Prob. 15PCh. 12 - Prob. 16PCh. 12 - Prob. 17PCh. 12 - Prob. 18PCh. 12 - Prob. 19PCh. 12 - Prob. 20PCh. 12 - Prob. 21PCh. 12 - Prob. 22PCh. 12 - Prob. 23PCh. 12 - Prob. 24PCh. 12 - Prob. 25PCh. 12 - Prob. 26PCh. 12 - Prob. 27PCh. 12 - Prob. 28P
Knowledge Booster
Similar questions
- Consider the following investment opportunity: Capital Investment (End of Year 0) Expenses (per year) Revenues (geometric series) $450,000 $25,000 $60,000 in the first year, increasing 5% per year following Market value (End of Year 20) Study Period (years) MARR (per year) $90,000 20 years 10% 10% Interest Tablearrow_forwardPat James, the purchasing agent for a local plant of the Oakden Electronics Division, was considering the possible purchase of a component from a new supplier. The component’s purchase price, $0.90, compared favorably with the standard price of $1.10. Given the quantity that would be purchased, Pat knew that the favorable price variance would help to offset an unfavorable variance for another component. By offsetting the unfavorable variance, his overall performance report would be impressive and good enough to help him qualify for the annual bonus. More importantly, a good performance rating this year would help him to secure a position at division headquarters at a significant salary increase. Purchase of the part, however, presented Pat with a dilemma. Consistent with his past behavior, Pat made inquiries regarding the reliability of the new supplier and the part’s quality. Reports were basically negative. The supplier had a reputation for making the first two or three deliveries on…arrow_forwardRho Merchandising supplies T-shirts to AK Mart. Currently, Rho orders T-shirts from varioussuppliers. One of the T-shirts is ordered in batches of 150 units. It has been estimated that an annualdemand for T-shirts is 25,000 pieces. Furthermore, carrying cost is estimated to be P10 per T-shirt peryear. For the other policy to be optimal, determine what the ordering cost would have to be.arrow_forward
- Suppose that KCA University intends to introduce a new course from September 2020. The college estimates that it will incur a fixed cost of Ksh.2.4M per annum and an average annual variable costs of Ksh.8,000 per student to run the course: Required: Calculate the number of students KCA should enroll in order to breakeven if it intends to charge annual fee of Ksh.40,000 per student. Using the level of enrolment obtained in (i) above, compute the level of expected total revenue and total cost of the college. Suppose that you are the Vice Chancellor of KCA University, will you introduce this course if the maximum number of students Kenya University and College Central Placement Service (KUCCPS) will allocate you is 200? (Justify your answer – show all relevant calculations).arrow_forwardThe investor-developer would not be comfortable with a 7.8 percent return on cost because the margin for error is too risky. If construction costs are higher or rents are lower than anticipated, the project may not be feasible. The asking price of the project is $4,600,000 and the construction cost per unit is $80,400. The current rent to justify the land acqusition is $1.3 per square foot. The weighted average is 900 square feet per unit. Average vacancy and Operating expenses are 5% and 35% of Gross Revenue respectively. Use the following data to rework the calculations in Concept Box 16.2 in order to assess the feasibility of the project: Required: a. Based on the fact that the project appears to have 9,360 square feet of surface area in excess of zoning requirements, the developer could make an argument to the planning department for an additional 10 units, 250 units in total, or 25 units per acre. What is the percentage return on total cost under the revised proposal? Is the…arrow_forwardPls help with below homework. A particular apartment building has changed ownership three times in 10 years. and the price has increased each time a minimum of 23%. Price increases for similar apartment buildings have averaged 17% per sale in that time. Is a licensee in Illinois justified in guaranteeing a prospective buyer of this apartment building at least an 8% profit on the resale of the property? Select the correct option from below : A) Yes, because this apartment building has a proven profitability history. B) Yes, because the average price increase for similar apartment buildings is more than twice the target amount. C) No, because the licensee should never guarantee a future profit of any amount. D) No, because past sales figures cannot reliably predict future prices.arrow_forward
- Jane Livingston, an industrial engineer at Energy Conservation Service, hasfound that the anticipated profitability of a newly developed water-heaterthe temperature-control device can be measured by net present worth as PW = 5.63V(4.3X - $15) - 33,580 where Vis the number of units produced and sold and X is the sales price per unit. She also found that the V parameter value could occur anywhere in the range of 1,500 to 5,000 units and the X parameter value anywhere between $10 and $35 per unit. Develop a sensitivity graph as a function of the number of units produced and sales price per unit.arrow_forwardEaton Medical Services is evaluating 10 independent indivisible projects, all with positive NPV. The company's capital budgeting for the year is limited to a maximum of $5,000,000. (A) Use solver to find the optimum combination of projects the company should accept, under the assumption that A and B are mutually exclusive and one of them has to be selected. (B) Ignore the constraint from previous part, assume that project “I” has to be accepted. Use solver to find optimum combination of projects the company should accept now. Please show all steps to compute in excel using solver to get to the right answers. Thank you in advance, will upvote! Project Cost NPV A 1,061,191 122,737 B 561,758 58,102 C 1,647,849 280,660 D 1,026,020 89,365 E 191,870 17,568 F 1,333,625 76,960 G 3,102,642 123,240 H 275,568 79,367 I 2,044,070 60,506 J 1,017,567 56,690arrow_forwardAnswer the problems on the basis of the above graph and the most likely estimates given as follows: If the profit (R−E) is decreased by 5%, this projectis not profitable. (a) True (b) False.arrow_forward
- A stock is currently at $20. It can go to $22 or $18 in 3 months. The risk free rate is 12% per year. A call option with a strike price of $21 is available. If the real world expected return on the stock is 16% per year, what is the implied real world discount rate for the option.arrow_forwardTwo projects are independent if the expected costs and the expected benefits of each project do not depend on whether the other one is chosen. Select one: True False 35arrow_forwardEngineering Economics Bawal gumamit ng excel( Don't use Excel) 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. (Insert Table) 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.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education