2- The manager of engineering at the 900- megawatt Hamilton Nuclear Power Plant has three options to supply personal safety equipment to employees. Two are vendors who sell the items, and a third will rent the equipment for $50,000 per year, but for no more than 3 years per contract. These items have relatively short lives due to constant use. The MARR is 10% per year. Initial cost, $ Annual upkeep cost, s/year Annual rental cost, $ per year Salvage value, $ Estimated life, years Vendor R -75,000 -27,000 0 0 2 Vendor T -125,000 -12,000 Rental 30,000 3 0 0 -50,000 0 Maximum of 3 a) Select from the two sales vendors using the LCM and PW analysis. b) Determine which of the three options is cheaper over a study period of 3 years.

2- The manager of engineering at the 900- megawatt Hamilton Nuclear Power Plant has three options to supply personal safety equipment to employees. Two are vendors who sell the items, and a third will rent the equipment for $50,000 per year, but for no more than 3 years per contract. These items have relatively short lives due to constant use. The MARR is 10% per year. Initial cost, $ Annual upkeep cost, s/year Annual rental cost, $ per year Salvage value, $ Estimated life, years Vendor R -75,000 -27,000 0 0 2 Vendor T -125,000 -12,000 Rental 30,000 3 0 0 -50,000 0 Maximum of 3 a) Select from the two sales vendors using the LCM and PW analysis. b) Determine which of the three options is cheaper over a study period of 3 years.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Your bakery can produce 3,000 unit of bagel per week for 48 weeks of operation per year. You aim to stay in this business for five years. You can either make the dough for the bagels in house or buy them from a different source. If you make the dough in house, you face with annual labour costs: $30,000, annual safety regulation costs: $5,000 and annual material costs: $20,000. But, if you choose to buy the dough from a different source, you must have a special dough-mixer machine to make adjustment for your production. Therefore, you need to pay $5,000 for the dough mixer machine, which has $1,000 salvage value at the end of 5 years. Furthermore, you face with annual maintaining costs including labour costs: $20,000 and additional overhead costs: $10,000 Using this information, find the unit cost of buy the bagel option with MARR 20%. Question 4 options: a) Between $0.70 and $0.80 b) None of the answers are correct…
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