11.1. Three alternative plans for expanding a municipal water distribution system will eachmeet demands for water and maintain required pressures. Each plan has a projectlife of 30 years. The initial investment cost and annual operation and maintenancecost for each plan are as follows:InitialinvestmentAnnual operationand maintenancePlancost ($)cost ($)A120,00028,000B160,00024,000C290,00010,000Select the economically optimum plan based on a discount rate of 8 percent. Performthe evaluation alternatively based on present worth and annual worth.

We will evaluate each plan using both Present Worth (PW) and Annual Worth (AW) methods to determine…

Answered: 11.1. Three alternative plans for…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Metro has initiated discussions on attracting rail service. A depot would need to be constructed, which would require $2.5million in land and $7.5 million in construction costs. Annual operating and maintenance costs (O&M) for the facility would be $150,000, and personnel costs would be an additional $110,000. Other assorted costs would be born by the railroad and federal authorities. Annual benefits (B) of the rail service are estimated as listed: $120,000 for Railroad annual payments, $25,000 for Rail tax charged to passengers, $20,000 for Convenience benefits to local residents, and $12,000 for Additional tourism dollars for Metro. Apply the B-C ratio method, with a MARR of 8% per year and 20 year study period, to determine if the rail service should be established. a. BC ratio=2.12, good project b. BC ratio=-1.76, good project c. BC ratio=1.69, good project d. BC ratio=0.14, not good project
Fort Wayne Plastics Inc is trying to develop a plan for its workforce and production levels for the six-month period from January to June. The firm produces plastic components. Forecast demands over the next six months are 1,304, 633, 809, 1,175, 2,146, and 1,373. There are currently (end of December) 347 workers employed in the plant. Ending inventory in December is expected to be 461 units, and the firm would like to have 575 units on hand at the end of June. The cost of hiring one worker is $546. The cost of firing a worker is $900. The cost of holding one unit of inventory for one month is $60. In the past, the plant manager observed that over 21 working days, with the workforce level constant at 76 workers, the firm produced 233 plastic components. The number of working days per month from January to June for this year is 26, 25, 25, 17, 22, 17. Find the optimal production per month as well as the corresponding optimal cost for this plan. P1 Number P2= Number P3 Number P4 Number…
Emerson Electric is considering the purchase of equipment that will allow the company to manufacture a new line of wireless devices for home appliance control. The first cost will be $80,000 and the life estimated is 6 years with a salvage value of $10,000. Three different salespeople have provided estimates regarding the added revenue the equipment will generate. Salespersons 1,2, and 3 have made estimates of $10,000 , $16,000 , and $18,000 per year respectively if the Companys MARR is 8% per year find the PW of each salespersons estimates.
Below are instructions for Wilson hotel Michael Wilson entered into a new business, hotel ownership, by buying a small 24 room hotel and café. The hotel is located in a remote area of Minnesota that is popular for tourists. Michael has hired you for advice. Michael hired a young couple to run the hotel and café on a daily basis and plans to pay them a monthly salary. They will live for free in a small apartment adjacent to the office. The couple will be responsible for hiring and supervising five part-time personnel who will help with cleaning the rooms, cooking, waiting on customers in the café. The couple will maintain records of rooms rented, meals served, and payments received. They will also make weekly deposits. Mike is concerned about his lack of control over the records and operations. Mike lives 5 hours away and will only be able to make periodic visits. Mike trusts the couple but wonders if it makes sense to place so much trust in employees. Mike needs your help to identify…
The Candle Company plans to open a new retail store in Portland, Maine. The store will sell specialty candles for an average of $10 each. The average variable costs per candle are as follows: Wax $4 Other additives $2 Base $1 The company is negotiating its lease for the new location. The landlord has offered two leasing options: Option A) a lease of $2,500 per month; or Option B) a monthly lease cost of $2,000 plus 10% of the company's monthly sales revenue. The lease option that is more attractive for the company under its current sales expectations is option B, the fixed lease payment plus sales based commission because it results in the lowest total lease costs The indifference point is The company expects to sell approximately 400 candles per month. Requirement 2. At what level of sales (in units) would the company be indifferent between the two lease options? Show your proof. candles. Begin by selecting the equation to determine the indifference point. (Abbreviations used" FC =…
b. What is the expected value for the rezoned apartments, if the rezoning cost is included (but land cost is excluded)? Note: Do not round your intermediate calculations. Enter your answers in millions rounded to 2 decimal places. Negative amounts should be indicated by a minus sign. Expected value million c. If the land is rezoned, what should the contractor decide? O Build shopping center O Build apartments d. What is the expected revenue, if the land is not rezoned (excluding the land cost)? Note: Do not round your intermediate calculations. Enter your answers in millions rounded to 2 decimal places. Negative amounts should be indicated by a minus sign. Expected revenue million e. What is the expected net profit of entire project, including all applicable costs? Note: Do not round your intermediate calculations. Enter your answers in millions rounded to 2 decimal places. Negative amounts should be indicated by a minus sign. Expected net profit million
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Current Attempt in Progress Joyful Journeys Music School provides private music lessons for elementary students. Its operating costs are as follows: Rent on facilities Advertising Instrument Rent Teaching Instruction Books Other Costs $2,010 per month $534 per month $750 per month $38 per student $5 per student $3 per student Joyful Journeys charges $100 per student per month. Determine the company's break-even point in (1) number of students taught per month and (2) dollars. (1) Break even in number of students taught per month (2) Break even in dollars eTextbook and Media
A flood control reservoir project and channel improvement project are proposed for reducing flood damages along a stream in an urban area. Estimated costs are as follows: Dam and reservoir project Channel improvement project Initial investment $1,500,000 $1,200,000 Annual maintenance $10,000/yr $5,000/yr Hydrologic, hydraulic and economic studies have been conducted to develop the following relationships for the river reach and flood plain: (a) annual exceedance probability versus peak discharge with and without the reservoir, (b) discharge versus stage with and without the channel improvement, and (c) stage versus damage Annual Peak discharge Stage (ft) exceedance (cfs) probability Without With Discharge reservoir reservoir (cfs) Without With Stage Damage project project (ft) million) 0.50 3,000 2,700 0 0 0 9 0.0 0.20 5,400 0.10 7,600 4,200 3,500 5,000 10. 7 10 0.2 10,000 15° 11 15 1.1 0.05 10,400 5,500 15,000 20 14 20 2.2 0.02 0.01 19,000 0.005 24,000 20,000 15,000 8,600 20,000 23 17…
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Variable cells Cell Name Final Value Reduced Cost Objective Coefficient Allowable Increase Allowable Decrease $B$6 Activity 1 3 0 30 23 17 $C$6 Activity 2 6 0 40 50 10 $D$6 Activity 3 0 –7 20 7 1E+30 Constraints Cell Name Final Value Shadow Price Constraint R.H. Side Allowable Increase Allowable Decrease $E$2 Resource A 20 7.78 20 10 12.5 $E$3 Resource B 30 6 30 50 10 $E$4 Resource C 18 0 40 1E+30 22 What is the allowable range for the right-hand-side for Resource C?

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