Question 2Your rubber duck company is considering adding a new bath toyproduct line, and they have two material alternatives: rubber andplastic. The expected costs and revenues for each alternative aregiven below, as well as the useful lives of the manufacturingequipment. Use a study period of 6 years, the coterminationassumptions, and a MARR of 9%.Plastic:Initial investment: $80,000Annual cost: $29,000Annual revenue: $88,000Salvage value: $16,000Useful life: 6 yearsWhat is the present worth of the plastic alternative?Typed numeric answer will be automatically saved.

To calculate the present worth of the plastic alternative, we need to determine the present value of…

Answered: Question 2 Your rubber duck company is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Three mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given next. The MARR is 20% per year. At the conclusion of the useful life, the investment will be sold A B $28,000 $55,000 Capital Investment Annual Expenses Annual Revenues MV at EOY 10 Useful life ACapital Investment AMarket Value AAnnual Income (REV - EXP) Blank 1 15,000 AIRR 23,000 4 PW 6,000 8,000 10,000 10 years 10 years 10 years Use incremental analysis to determine the best alternative on the basis of PW method & IRR method. Is increment justified? 13,000 28,000 Blank 1 Blank 4 Blank 7 Blank 10 Blank 13% Blank 16 C $40,000 Blank 19 22,000 32,000 Blank 2 Blank 5 Blank 8 Blank 11 Blank 14% Blank 17 Blank 20 Blank 3 Blank 6 Blank 9 Blank 12 Blank 15% Blank 18 Blank 21
BASED ON ESTIMATES THE DATA FOR TWO TYPES OF BRIDGES WITH DIFFERENT LIVES ARE AS FOLLOWS. IFTHE MINIMUM RATE OF RETURN IS 9%, DETERMINE W/C PROJECT IS MORE DESIRABLE. TIMBER BRIDGE STEEL BRIDGEFIRST COST P 50,000.00 P 140,000.00SALVAGE VALUE 2,000.00 10,000.00LIFE IN YEARS 12 36ANNUAL MAINTENANCE 6,000.00 2,500.00EVALUATE USING:A.) THE ANNUAL COST METHODB.) PRESENT WORTH COST METHODC.) RATE OF RETURN METHOD
FOR QUESTION NUMBER 21 Determine feasibility of the project using IRR and ERR of the project. Is it acceptable? Use &= 15% and MARR =20%. Investment Capital PhP 10,000 Expected life 5 years Market Value -1,000 Annual Receipts 8,000 Annual Expenses 21. Determine the IRR value of this project, is it acceptable? a. Yes, IRR = 0.3062 b. No, IRR= 0.1981 4,000 c. Yes, IRR = 0.3264 d. No, IRR = 0.1865
A start up business is considering two types of equipment - data are as follows: TYPE A ΤΥΡE Β First Cost P200,000.00 P300,000.00 Annual operating cost 32,000.00 24,000.00 Annual labor cost 50,000.00 32,000.00 Insurance and property taxes 3% 3% Payroll taxes 4% 4% Estimated life 10 10 The minimum required rate of return is 15%. Using present worth cost method, determine the value of alternative A and alternative B: ANSWER for ALTERNATIVE A: Blank 1 ANSWER for ALTERNATIVE B: Blank 2 Blank 1 Add your answer Blank 2 Add your answer
1) Consider the follows Projects: If MARR- 17%. Recommend the best choice based upon ROR analysis: с -800 190 0 BOY D Initial Cost Annual income -2000 260 Salvage value Life 0 10 10 Known ROR 22% 18% 16.9% Need exact value of the incremental ROR on the last comparison. Others need its reasonable range for proper decision in the process. -500 140 0 10 24% B -1000 250 0 10
1. You have been selected to prepare the following analysis of cost alternatives and select the preferred alternative. The study period is 10 years and the MARR=12% per year. A Capital Investment Annual Net- $11,000 $16,000 $20,000 600 900 1000 Revenues Salvage Value 1,000 1,300 2,000 Economic Life 10 yrs 10yrs 10yrs
. A manager has been presented with two proposals for automating a production process. Proposal A involves an initial cost of $15,000 and an annual operating costof $2,000 per year for the next 4 years. Thereafter, the operating cost is expected to increase by $100 per year. This equipment is expected to have a 10-year life with no salvage value.Proposal B requires an initial investment of $28,000 and an annual operating cost of $1,200 per year for the first 3 years. Thereafter, theoperating cost is expected to increase by $120 per year. This equipment is expected to last for 20 years and will have a $2,000 salvage value. If the company's minimum attractive rate of return is 10%, which proposal should be accepted on the basis of present worth analysis?
Table Q1 Investment Cost Expected Life Market (Salvage Value) Annual Receipts Annual Expenses Proposal A RM 10,000 5 years -RM 1,000 RM 8,000 RM 4,000
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
Determine feasibility of the project using FW Method. Use MARR = 10%. %3D Alternatives A В C D Capital investment -$150,000 -$85,000 -$75,000 -$120,000 Annual revenues $28,000 $16,000 $15,000 $22,000 Annual expenses -$1,000 -$550 -$500 -$700 Market Value (EOL) $20,000 $10,000 $6,000 $11,000 Life (years) 10 10 10 10 Round off your answer to the NEAREST WHOLE NUMBER Ex. 12345 FW of Alt. A is Blank 1 FW of Alt. B is Blank 2 FW of Alt. C is Blank 3 FW of Alt. D is Blank 4
3) A and B are mutually exclusive projects.. What MARR has to be for A to be chosen? A B Initial cost Useful life Annual benefit Salvage value Rate of return $30,000 6 years $8,577 $0 18%lyr $50,000 6 years $8,577 $29,098 12%/yr a) MARR<8.4% b) MARR< 6.4% c) 8.4%
1. For the three options in the table, use the annual worth comparison and an interest rate of 10% per year to determine the option that is economically best. [7] Y First cost, $ -60,000 -200,000 -600,000 Annual O&M cost, $/year -50,000 -40,000 -12,000 Salvage value, $ 10,000 40,000 270,000 Life, years 3 10

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