Auburn Recreation and Parks Department is considering two mutually exclusive proposals for a new softball complex on a city owned lot. The complex will be useful for 30 years and has no appreciable salvage value (regardless of seating capacity). Assuming an 8% discount rate, which proposal should be selected based on the benefit-cost analysis? Alternative Design Seat Capacity Annual Benefit Annual Cost Required Investment A1 3000 $194000 $87500 $800000 A2 4000 $224000 $105000 $1000000

Auburn Recreation and Parks Department is considering two mutually exclusive proposals for a new softball complex on a city owned lot. The complex will be useful for 30 years and has no appreciable salvage value (regardless of seating capacity). Assuming an 8% discount rate, which proposal should be selected based on the benefit-cost analysis? Alternative Design Seat Capacity Annual Benefit Annual Cost Required Investment A1 3000 $194000 $87500 $800000 A2 4000 $224000 $105000 $1000000

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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With interest at 10%, what is the benefit-cost ratio for this government project? Initial Cost Additional costs at the end of year 1 and year 2 Benefits at end of year 1 and year 2 Annual benefits at end of year 3 through year 2 Enter your answer as follow 12.34 $208,355 $23,720/year $0Ayear $91.825/year
The following projects listed in TABLE Q48 are being considered by Muhibbah Fabrication Company for allocation of its annual capital budget. While many worthy projects are available, the money available is limited. All projects have a 5-year life and are acceptable at a 10% interest rate. TABLE Q48: List of available projects to fund Project First Cost (RM) Net Annual Benefits PW (10%) (RM) (RM) 3,200 2,131 6,000 2,745 5,000 2,000 A B C D 10,000 20,000 A. B. C. D. 15,000 5,000 3,954 2,582 A B C D C B D A B C A D B-A-C-D Use this information, answer Q48 through Q50: 48. Rank the projects in descending order (best to worst) using PW at an interest rate of 10%. IRR (%) 49. Rank the projects in descending order (best to worst) based on IRR. A. B C A-D B. B A C D C. D→C-A-B D. D-B-C-A 18.03 15.24 19.86 28.65 50. If there is only RM30,000 allocated for capital budget, determine the MARR applicable for the funded projects. A. 28.65% B. 19.86% C. 18.03% D. 15.24%
6. David is opening an Aerial Adventure Park. He has three mutually exclusive design alternatives: Capital investment Annual receipts Annual expenses Design A $175,000 $115,000 $70,000 Design B $350,000 $150,000 $80,000 Design C $300,000 $125,000 $70,000 Market values are negligible. A 10-year study period is to be used and the MARR is 10% per year. Use the FW Method to determine which alternative should be chosen.
kuzukuzu12121@outlook.com just sent here I NEED EXCEL FİLE. Determine the NPW, AW, FW and IRR of the following engineering project. Initial Cost ($400,000) The Study Period 15 years Salvage (Market) Value of the project 15% of the initial cost Operating Costs in the first year($9,000) Cost Increase 3% per year Benefits in the first year $40,000 Benefit Increase 9% per year MARR 8% per year Is the Project acceptable? WHY?
A cost analysis is to be made to determine what, if anything, should be done in a situation offering three alternatives in addition to doing nothing. Costs and benefits of the alternatives are estimated as follows: Alternative Cost Uniform Annual Benefit Residual Value Useful life (years) A 450,000 150,000 0 4 B 550,000 125,000 300,000 4 с 800,000 135,000 250,000 8 Use an 8-year analysis period, "stacking" projects as necessary. Use Excel to choose which, if any, of the projects should be chosen: MÁRR is 15%. a. Using annual worth analysis b. Using rate of return analysis
You are charged with choosing a vendor to produce a new software that is going to benefit your company. The project has a life cycle of 8 years and MARR of 8% annual interest. Part a.) Draw the cash flow diagram for each vendor. Part b.) Calculate a PW cost for each vendor. Part c.) Indicate which vendor you would choose. Task Development Programming Operation Support Vendor M Cost, $ 200,000 150,000 42,000 20,000 40,000 30,000 Time Frame Now Years 1-4 Now Years 1-3 Years 1-8 Years 1-8 Vendor N Cost, $ Time Frame 70,000 60,000 45,000 50,000 35,000 Now Now Years 1-5 Years 1-8 Years 1-8 Vendor O Cost, $ 150,000 Time Frame Years 1-8
Fiesta Foundry is considering a new furnace that will allow them to be more productive. Three alternative furnaces are under consideration. Perform an incremental analysis of these alternatives using the IRR method for each increment of cash flows. The MARR is 10% per year. E Click the icon to view the description of the alternatives. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. Perform the incremental PW Analysis. Fill-in the table below (Hint: Order alternatives by increasing capital investment). (Round to the nearest dollar.) Incremental Investment Inc. PW Alternative to be selected A V A
PART 2 - C PROBLEM SOLVING PROBLEM NO.4 Compute for the CR Amount: $3500 market Value productivity attributable to equipment per year (operating costs have afready been deducted from the revenue) $8500 $8500 $8500 $8500 $8500 1 2 3 4 5 End of Year i= 25%/yr $23500 investment Cost
Problem 4) Given the Alternatives: Initial Cost Annual Benefits Annual Costs (beginning at end of Year 1) Salvage Value Useful Life (Years) If MARR is i = 10%, calculate the NPW for each alternative and specify the preferred alternative. $ 45000 $0 $ 2700 $ 3000 10 $ 54000 $0 $ 2850 $ 4500 15
1. A pharmaceutical company that manufactures ascorbic acid tablets is investigating two production options that have the estimated cash flows shown ($10 million units). Which one should be selected based on a present worth analysis (in million units) at 10% per year? In- outsourced house Initial Investment -30 Annual cost, $ per year 24 -5 -2 Annual Revenue, $ per 13 year 2 N/A Salvage Value, $ Life
A certain masonry dam requires 200,000 m³ of gravel for its construction. The contractor found two possible sources for the gravel with the following data: Source A Source B Average distance, gravel pit to dam site 3 km 1.2 km Gravel cost/m³ at pit ➖➖➖➖➖ P10 Purchase price of pit P800,000 Road construction necessary P450,000 Overburden to be removed at P4.20/m³ 90,000m³ ➖➖➖➖➖➖ Hauling cost/m³/km P4 P4 What is the Total Cost of Source A
Example 3: Applying present worth when useful lives are equal Interest: 8%; N = 6 years Alternatives Atlas Tom Thumb Cost $2000 $3000 Uniform Annual End-of-Useful-Life Salvage Value Benefit $450 $600 $200 $700