2. In the design of a new facility, the mutually exclusive alternatives in the table below are under consideration. Assume that the interest rate (MARR) is 15% per year and the analysis period is 10 years. Use the AW method to choose the best of these three design alternatives Capital investment Annual revenue less expenses Market value Useful life (years) Design 1 -$28,000 5,500 1,500 10 Design 2 -$16,000 3,300 0 10 Design 3 -$23,500 4,800 500 10

2. In the design of a new facility, the mutually exclusive alternatives in the table below are under consideration. Assume that the interest rate (MARR) is 15% per year and the analysis period is 10 years. Use the AW method to choose the best of these three design alternatives Capital investment Annual revenue less expenses Market value Useful life (years) Design 1 -$28,000 5,500 1,500 10 Design 2 -$16,000 3,300 0 10 Design 3 -$23,500 4,800 500 10

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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2. You are presented with three investment possibilities; however, you only have enough money to invest in one (the opportunities are mutually exclusive). The MARR is 5%,. Which one should be chosen? Make a decision based on an incremental rate of return analysis. A B Initial Cost Annual Benefit $ Salvage ValueS Life (yrs) $ (100,000) $ (150,000) S (210,000) 45,000 $ 35,000 $ 6. 50,000 $ 10,000 S 27,000 40,000 6| 8% ROR 12% 11%
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%
The five mutually exclusive alternatives shown below are under consideration for improving visitor safety and access to additional areas of a national park. If all alternatives are considered to last indefinitely, determine which should be selected on the basis of a rate of return analysis using an interest rate of 10%. A B C D E_ First cost, $ millions -20 -40 -35 -90 -70 Annual M&O cost, $ millions -2 -1.5 -1.9 -1.1 -1.3 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
a. The PW of the Gas Heating Option is b. The PW of the Geothermal Heating Option is c. The lower cost alternative is the geothermal heating option
Question 4 Which increment should be examined first in incremental rate of return analysis, if MARR = 9.0%? Do-nothing A First cost Annual benefit Life ROR A-B O A-C O B-C OB-A 0 0 10 yrs $5,500 895 10.0% B C $3,000 $7,000 531 1,164 12.0% 10.5% D $3,000 408 6.0%
Some particulars for a project are as follows. Initial Capital Cost in year 0 ($Mn) Follow-up 'one-off' cost in year 1 ($Mn) Annual Operating Cost ($Mn/yr) Annual Benefits ($Mn/yr) Project Closure Cost, at end of project life ($Mn) Useful Life (years) Interest/Discount rate (percent) Correct Answers 1000 300 10% of capital cost 400 9,254 (with margin: 5) 200 20 7 What is the Life Cycle Cost of the project - expressed in future value term? (your answer must be rounded off to the nearest million dollars, i.e., no decimal places)
Need answe for Part D and E
TRUE OR FALSE For any economy study based on our discussions, it is always necessary to determine the profit to evaluate thebetter/best alternative. If simple interest is evaluated, then the interest obtained will always be directly proportional to the number of yearsassuming that a constant interest rate is used throughout these years.
Suppose you are offered two options: (i) receive Taka 30,000 at the end of 5 years or (ii) receive Taka P today and another Taka P 2 year later. When you invest the P Taka in ecommerce it pays around 8% profit yearly. What value of P would be same as promise of Taka 30,000 after 5 years? Assume there is no risk in this future payment.
What is the best alternative using incremental Analysis? Use MARR = 15% A B C Capital Investment $ 2,000 7,000 4,200 Annual Revenues 3,200 8,000 6,000 Аппиal Costs 2, 100 5, 100 4,000 Market Value at the end of useful life 100 600 420 Useful Life (in years) 10 10 10 The correct ranking of Alternative is Blank 1 Select Alternative Blank 2 Note: Do not put comma, unit of measure and limit your answer to two decimal places. Ex: A-B-C
Solve by incremental cashflow then PW = 0. To get the value of i by interpolation. Problem 3: Two plans for a hydroelectric project in Peru have been proposed. The opportunity cost, in soles, of resources is 10 percent. Data on the two alternatives are: System First cost ($/,000,000,000) 300 160 Economic life (years) 40 20 Salvage value ($/,000,000,000) 15 12 Annual benefits (S/.000,000,000) 25 22 Annual costs ($/,000,000,000) 3 1 Using the internal rate of return method, which of the two systems should be chosen or should either be selected?
6) Data for 2 alternatives are given below. If i = 10%, determine the cost of alternative A so that the 2 altematives will be equally desirable using ВС ratio. Alternatives A B Cost X P3,200 Salvage Value 900 600 Annual Benefit 1150720 Life (years) 8 8