Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 12, Problem 3P
To determine
Calculate the after tax annual cash flow.
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You are faced with making a decision on a large capital investment proposal. The capital investment amount is $640,000. Estimated annual revenue at the end of each year in the eight year study period is $180,000. The estimated annual year-end expenses are $42,000 starting in year one. These expenses begin decreasing by $4,000 per year at the end of year four and continue decreasing through the end of year eight. Assuming a $20,000 market value at the end of year eight and a MARR = ε =12% per year, answer the following questions.
Using AW, determine whether this proposal is acceptable.
What is the ERR of this proposal? Is it acceptable?
What is the IRR of this proposal? Is it acceptable?
What is the simple and discounted payback period for this proposal?
You are faced with making a decision on a large capital investment proposal. The capital
investment amount is $640,000. Estimated annual revenue at the end of each year in the
eight year study period is $180,000. The estimated annual year-end expenses are
$42,000 starting in year one. These expenses begin decreasing by $4,000 per year at
the end of year four and continue decreasing through the end of year eight. Assuming a
$20,000 market value at the end of year eight and a MARR = ɛ =12% per year, answer
the following questions.
a). Using AW, determine whether this proposal is acceptable.
b). What is the ERR of this proposal? Is it acceptable?
c). What is the IRR of this proposal? Is it acceptable?
Estimated sales of a product is 30000 units. Two kinds of raw materials P and Q are required for manufacturing the product. Each unit of the product requires 2
units of P and 4 units of Q. The estimated cost of the P and Q OMR 2 and OMR 3 respectively.
The estimated opening balance in the beginning of the next year: finished goods: 4000 units; P: 6000 units; Q: 10000 units.
The desirable closing balance at the end of the next year: finished product: 6000 units: P: 10000 units: Q: 12000 units.
Which of the following shows the total cost of raw materials (OMR) to be purchased in Material Purchase Budget.
Select one:
O a. P = 162000 and Q = 181000
O b. P= 136000 and Q= 390000
O c.P = 124000 and Q =324000
O d. P = 134000 and Q = 334000
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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
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