2. A municipality is considering an investment in a small renewable energy power plantwith the following parameters. The cost is $400,000 and the output averages 50 kW year-round. The price paid for electricity at the plant gate is $0.037/kWh. The investment is tobe evaluated over a 25-year time horizon, and the expected salvage value at the end of theproject is $22,000. The MARR is 7%. [Total: 9 marks]a. Calculate the net present value (NPV) of this investment. Is it financiallyattractive?b. Calculate the operating credit per kWh which the government would need to giveto the investment in order to make it break even financially. Express your answerto the nearest 1/1000th of dollars.

The objective of this question is to evaluate the financial attractiveness of an investment in a…

Answered: 2. A municipality is considering an…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the following two mutually exclusive projects being considered by an agency. The agency's MARR is 6% per year and the projects have a service life of 5 years. Initial cost Annual revenues Present Worth (PW) Answer the following questions. Project 1 $14,200 $3,832 $1,942 Project 2 $21,700 $5,637 $2,045 a. Based on the PW, the project that is more economical is Project 2 (Enter the project number). b. Calculate the IRR of each alternative (use the trial-and-error method) The IRR of Project 1 is % (Round to the nearest one decimal place) The IRR of Project 2 is% (Round to the nearest one decimal place) c. Perform the incremental IRR analysis to determine the project that is more economical: Incremental IRR =% (Round to the nearest one decimal place); Therefore, based on the incremental IRR, Project 2 is more economical.
Answer is 296,611. Please show solution.
1 - Assuming an interest rate of 3% per year (effective), calculate the feasibility of each option. You can use either Present Worth Analysis or Equivalent Uniform Worth Analysis. In this part, your calculation should be done without the use of Excel. Show your equations and the results. 2 - Using linear interpolation, calculate the rate of return for each option. Here, your calculation should be implemented using Excel. 3 - Assuming that the initial equipment can be depreciated over the course of 20 years and usingDouble Decline Balance Depreciation, calculate the depreciation schedule for the equipment. 4- Assume a state income tax of 5%. Calculate the after-tax cashflow for each option assuming the depreciation used. Use only the depreciation on question 2.
Please answer as quickly as possible A project is currently under review. An initial investment of $87,000 would be necessary for equipment. The profit is expected to be $21,000 each year, over the 6 year project period. The salvage value of the equipment at the end of the project period is projected to be 17,000. Assume a MARR of 9%. Find an ERR for this project (exact value or smallish interval). (Be careful with +/- signs) (if your approach requires a starting point, use 12%)
2
A company is considering purchasing either machine A or B, given that MARR is 10%, and the company projected sales is 40,000 units. Machine A Machine B $90,000 $39,000 $1100 +.02xunits $600 +0.03xunits Initial cost $70,000 $40,000 $1000+0.03xunit $500+0.05xunit 8 years $15,000 Annual revenues Annual Operation cost Annual Maintenance cost 6 years $10,000 Life span Salvage value Draw the cash fiow diagram for each machine. a. b. Compute ERR for each machine, based on computed ERRS, which machine is to be selected7 Explain the difference between the IRR & ERR methods as explained in the lecture.
# 3 QUESTION 10 Suppose the MARR is 5%. Use the following table to answer the question-Which option should be selected as the base alternative? Initial Investment Annual Revenue Useful Life (Years) E D $ 4 R CMS A. Neither option is acceptable as a base alternative. OB. Both options are acceptable base alternatives. OC. FMS OD. I'm completely lost! E. CMS F Click Save and Submit to save and submit. Click Save All Answers to save all answers. 888 74 $31,000 $38,000 6,866 % FMS 5 T 9,201 G 6 MacBook FO H & 7 F7 U +00 8 J 9 K Save All Answers P 7.
A manufacturing company is considering investing in a new machine that costs $12,000. The machine has an expected life of 5 years and a salvage value of $6,000. The estimated annual revenue generated by the machine is $10,000, and the annual operating costs are $3,000. What is the future worth (FW) of the investment at an MARR of 20%? CHOICES: $29,300.00 $36,500.00 $46,200.00 $58,300.00
CustomMetalworks is considering the expansion of their cablefabrication business for towers, rigging, winches, and many other uses. Theyhave available $250,000 for investment and have identified the followingindivisible alternatives, each of which will provide an exit with full return ofthe investment at the end of a 5-year planning horizon. Each year,CustomMetalworks will receive an annual return as noted below. MARR is12%.Investment Initial Investment Annual Return1 $25,000 $7,5002 $40,000 $12,0003 $85,000 $20,0004 $100,000 $22,0005 $65,000 $17,000For the original problem:a. Which alternatives should be selected by CustomMetalworks?b. What is the present worth for the optimum investment portfolio?c. What is the IRR for the optimum investment portfolio?In addition to the original opportunity statement, CustomMetalworks hasdetermined that investments 3 and 4 are mutually exclusive andinvestment 5 is contingent on either investment 1 or 2 being funded.d. Now, which alternatives should…
An old, heavily used warehouse currently has an incandescent lighting system. The lights run essentially 24 hr / d * a * y , 365days / y * r and draw about 10 kW of power. Consideration is be ing given to replacing these lights with fluorescent lights to save on electricity. It is estimated that the same level of lighting can be achieved with 4.5 kW of fluorescent lights. Re placement of the lights will cost about $11,000. Bulb replacement and other maintenance are not expected to be significantly different. Electricity for the lights currently costs \$0.045/kWh . The warehouse is scheduled for de molition in five years to make way for a more modern facility . The company has a MARR of 15%. Should the company replace the incandescent lights with fluorescent lights? State any assumptions you make.
Q1: Three mutually exclusive alternatives X, Y, and Z are being considered as a permanent solution to an assembly line bottleneck. The data are: [6 marks] Initial Costa Annual Benefit Useful Life (years) Y Z $10k $15k $20k 1.6k 5 1.5k 1.9k 10 15 ⚫ As a prefix in SI units, k is an acronym for kilo, meaning 1,000. Assuming zero salvage value and an annually compounded interest rate of 8% per year, which alternative should be selected based on the AW-criterion. ( Show detailed calculations). Q2: Find out the capitalized cost of a certain investment based on the following: [4 marks] 1. An initial deposit of $100,000 2. Recurring payments of $10,000 each 6 years starting by the end of the first year for infinity. 3. Annual uniform payments of $2,000 starting by the end of year 10 for infinity. Use Interest rate = 6%
1.) Clinix is considering four independent projects. Given: All the projects will be economically viable for only 10 years; Company’s MARR = 12% per year Find: Which project should be selected based on a present worth analysis. *Note* Financial values are in $1,000 units. Project A Project B Project C Project D First Cost ($) -2,700 -1,400 -10,000 -9,500 Annual Net Profit ($/year) 800 1,200 2,400 3,200 Salvage Value ($) 25 30 45 60

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