1. Use the information below to answer the following questions: Your company is considering an investment project. The required rate of return for the project is 10%, and the project will produce the following cash flows: Year 0 1 2 3 Cash flow -55,000 15000 25,000 40,000 1. Calculate the net present value, will you accept the project? and why? 2. Calculate the payback period for this project? 3. Calculate the profitability Index for this project?

1. Use the information below to answer the following questions: Your company is considering an investment project. The required rate of return for the project is 10%, and the project will produce the following cash flows: Year 0 1 2 3 Cash flow -55,000 15000 25,000 40,000 1. Calculate the net present value, will you accept the project? and why? 2. Calculate the payback period for this project? 3. Calculate the profitability Index for this project?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 4 Part C: You have decided to invest in a project to build and run a production line for a friend. Your friend has specified that the production line needs to last forever, and will always be operational. The associated costs for the project are shown in the table below. How much should you charge your friend now for the production line in order to build and maintain the perpetual project? Interest rate is 6%. Costs Initial Cost Annual Operating & Maintenance Costs Year incurred Year O Major Maintenance Costs Amount $175,000 $10,000 $80,000 Question 4 Part C: What is the equation used to find the portion of the cost due to the Annual Cost (annual operating and maintenance costs)? Per year, forever First in year 5, then every 5 years forever P = 10,000/0.06 OP=10,000/0.06 +80,000(P/A, 0.06, 5) OP=10,000(P/F, 0.06, 1) + 80,000(P/A, 0.06, 10)
10. Two different routes are under consideration for a new interstate highway as folows in the table below. For either route, the volume of traffic will be 400,000 cars per year. These cars are assumed to operate at $0.25 per mile. Assume a 40-year life each road and an interest rate of 10%. Determine which route should be selected. 15 Click the icon to view the data for the two routes. 16 Click the icon to view the interest factors for discrete compounding when i= 10% per year. The BC(i)2-1 is (Round to two decimal places.) Which route should be selected? Choose the correct answer below. O Route 2 Route 1 15: More Info Length of Highway First Annual Cost Upkeep The "long" route Transmountain shortcut 22 miles $21 million $140.000 10 miles $45 million $165,000 16: More Info
Economic lease anser a and b
A company is considering the purchase of new equipment for $93,000. The projected annual net cash flows are $36,600. The machine has a useful life of 3 years and no salvage value. Management of the company requires an 11% return on investment. What is the net present value of this machine assuming all cash flows occur at year-end? a. $31,000 b. $4,600 c. ($3,561) d. $35,600 e. $86,996
3. Consider an individual whose income stream is (200,120) in a situation where he is faced with the choice of 3 economically independent projects, alpha, beta and gamma. The market interest rate is 50%. The cash flows for the three projects are as follows: Project Co C₁ Alpha Beta -20 24 Gamma 10 -12 a) Which projects (if any) would the individual invest in? b) How much would he end up consuming in time 0? c) How much would he end up consuming in time 1? d) Show that the individual is better off with the investments than if he just consumed according to his income pattern. -12 30
structions a learning assessment on the recorded discussion about investment decisions and ng the learning materials uploaded last week, answer the following, in good form: 1. A company considers purchasing a new machine that costs P600,050.00. It is projected that the machine will have a 3-year useful life, with no salvage value. The company is expected to generate P200,020.00 in annual cash flows net of taxes. The expected discount rate on capital is 11% and the tax rate is at 32%. 1. Determine the NPV. 2. Based on the NPV, should the company make the purchase?
A project has the cash flows shown in the cash flow diagram below, where the time periods are in years and all cash flows occur at once at the end of each year. What is the project's conventional payback period in years? a. 1 year b. 2 years c. 3 years d. 4 years e. 5 years $20K $20K $15K $15K TH 1 2 3 4 $10K $25K 5
Question 1 The following data have been estimated for two feasible investments, A and B, for which revenues as well as costs are known and which have different lives. If the minimum attractive rate of return is 8%, show which feasible alternative is more desirable by using NPW method. What is the difference in the NPWB-NPW (Not A-B) assuming repeatability? Ans. Sxxx.xx (STICK TO THE FORMAT) Alternative A B. Investment Cost $ 4,500.00 $7,050.00 Annual Revenue $2,429.00 $2,506.00 Annual Cost $650.00 $1,488.00 Useful Life (Years) 3 12 Salvage Value $500.00 $930.00
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Im taking an timed exam I need help soon as possible
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