9. A project sensitivity analysis yielded the below graph. Considering that, which of the following statements is INCORRECT: $70,000 Net Present Worth (5) $50,000 $30,000- $10,000 Salvage value Growth rate 0- -$10,000- -$30,000- -$50,000 -20% -15% -10% Base 5% -5% Percent Deviation from Base (%) 0 10% Unit price Deman Fixed cost Variable cost 15% 20% a) The project's NPW is most sensitive to the changes in unit price and variable costs than other factors b) An increase in demand volume yield always translate into an increase in the project's NPW c) The changes in growth rate have no impact on the project NPW d) If fixed costs were to increase by 20%, the project would still be accepted. 10. For a certain investment project, the net worth can be expressed as a function of the sales price (X) and variable production cost Y of NPW= 12,550 (2X - Y)- 8000. The base values for X and Y are $25 and $15, respectively. If the sales price is increased by 15% over the base price, how much change in NPW can be expected: a) 15% b) 18% c) 22% d) 30%

9. A project sensitivity analysis yielded the below graph. Considering that, which of the following statements is INCORRECT: $70,000 Net Present Worth (5) $50,000 $30,000- $10,000 Salvage value Growth rate 0- -$10,000- -$30,000- -$50,000 -20% -15% -10% Base 5% -5% Percent Deviation from Base (%) 0 10% Unit price Deman Fixed cost Variable cost 15% 20% a) The project's NPW is most sensitive to the changes in unit price and variable costs than other factors b) An increase in demand volume yield always translate into an increase in the project's NPW c) The changes in growth rate have no impact on the project NPW d) If fixed costs were to increase by 20%, the project would still be accepted. 10. For a certain investment project, the net worth can be expressed as a function of the sales price (X) and variable production cost Y of NPW= 12,550 (2X - Y)- 8000. The base values for X and Y are $25 and $15, respectively. If the sales price is increased by 15% over the base price, how much change in NPW can be expected: a) 15% b) 18% c) 22% d) 30%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Find the Present Worth of each of the option Investment: $10 million Annual Revenue: $103…

A: Net Cash flow = Annual Revenue - Annual Cost MARR = 5% Annual Revenue Grow at 1 % per years &…

Q: business is evaluating a project for which the following information is relevant: I. Sales will be…

A: The first step in calculating the Net Present Value (NPV) is to calculate the cash flows for each…

Q: Exhibit2 Price 85 80 75 70 65 60 55 50 45 1920x220 27.5 35 Supply Demand 5101520253050505065 70…

A: Producer surplus is the economic benefit that producers receive by selling a good or service at a…

Q: requires drilling operation uring processing. facility produce produc Two alternative types of…

A: EAC or equivalent annual cost is the cost to the company or individual for owning, maintaining, and…

Q: PLS HELP ASAP

A: A. 10,750,000Explanation:Retained Earnings for Year 1 10,300,000.00 Profit for Year 2…

Q: As an accountant, your job is to maintain your clients' accounting ledgers. Total Revenues 850,000…

A: Answer -

Q: Profitability Index A project has an initial cost of $40,000, expected net cash inflows of $12,000…

A: Hence the answer

Q: am. 161.

A: The objective of this question is to determine the breakeven point in terms of units of production…

Q: project is estimated to cost P100, 000, last ars and have a P10, 000 salvage value. The nual gross…

A: Comparable yearly expense is the annual expense of buying and keeping not entirely settled by…

Q: Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care…

A: Depreciation refers to the gradual decrease in the value of an asset over time. Imagine a brand new…

Q: Problem 1 - Revenue and Cost Calculations A manufacturing plant operation has fixed costs of…

A: The total cost of producing and providing a good or service to customers is referred to as cost of…

Q: Question #5: a. You have 2 investment choices. The Warlight machine costs $10,000 and has a salvage…

A: Given information 2 Machines: Warlight Machine and Bridgedale machine Cash flow table MARR=18%

Q: FE: You must choose between four pieces of comparable equipment based on the cash flows below. All…

A: The present worth of a project or investment refers to its value at present based on the associated…

Q: Calculate all applicable documentary stamp taxes and intangible taxes associated with financing the…

A: Documentary Stamp Tax: a charge on the transfer of an obligation or right or property shown by a…

Q: Calculate the present worth of all costs for a newly acquired machine with an initial cost of…

A: The initial cost of the machine = The life of machine = 12 years.The operating cost of the machine…

Q: project requires an investment of $10,000. If the interest rate decreases from 15 percent to 12 perc…

A: There is inverse relationship between interest rate and investment. For example, when the interest…

Q: Subject : Engineering Economics Please write handwritten Answer

Q: I need a strategic analysis of Thacker Pass Lithium project from a mining economic prospective.…

A: The Thacker Pass Lithium Project is a significant lithium deposit located in Nevada, USA. It is…

Q: - The costs associated with manufacturing a product are debited to "Operating Expenses". are all…

A: The costs associated with manufacturing a product, also called product costs, are capitalized as…

Q: NASA designed the Mars Climate Orbiter spacecraft to collect data about Mars' atmospheric con-…

A: How could such a mistake have occurred between the two teams? This is the pure case of…

Question

9. A project sensitivity analysis yielded the below graph. Considering that, which of the following
statements is INCORRECT:
$70,000
Net Present Worth (5)
$50,000
$30,000-
$10,000-
0-
Salvage
Growth rate
-$10,000-
-$30,000
-$50,000
-20%
-15% -10%
Base
5%
-5%
Percent Deviation from Base (%)
0
10%
Unit price
Dema
Fixed cost
Variable cost
15%
20%
a) The project's NPW is most sensitive to the changes in unit price and variable costs than other
factors
b) An increase in demand volume yield always translate into an increase in the project's NPW
c) The changes in growth rate have no impact on the project NPW
d) If fixed costs were to increase by 20%, the project would still be accepted.
10. For a certain investment project, the net worth can be expressed as a function of the sales price (X) and
variable production cost Y of NPW= 12,550 (2X-Y)- 8000. The base values for X and Y are $25 and
$15, respectively. If the sales price is increased by 15% over the base price, how much change in NPW
can be expected:
a) 15%
b) 18%
c) 22%
d) 30%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Determination of the incorrect options.

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Correct only pls. Only the highlighted parts. Npv if pretax cost savings are $100000 per year is -121277. 58. Now how to find the last part.
Q4= SAUDI Chemical Company is considering two types of equipment for burning waste material. Both equipment has burning capacity of 20 tons per day. The following data have been compiled for comparison of both equipment's. ITEM Installation cost Annual Operation & Maintenance cost Salvage value Income Tax Service Life EQUIPMENT A $1,220,000 $55,000 $65,000 $45,000 20 years EQUIPMENT B $ 770,000 $85,000 $35,000 $35,000 10 years Determine the yearly processing cost per ton of solid waste for each equipment, if the company's MARR is 12%. Also illustrate which option is best for selection?
You are considering an investment project with the financial information provided below. Suppose the company is most concerned about the impact of its price estimate on the project's rate of return. How would you address this concern? The break-even value of unit price is ?
Rerform an EAC analysis and evaluate what decision to make regarding 2 challengers and 1 defender. Elaborate:a) Graphsb) EAC analysisc) Conclude the exercise and make a decision regarding the results Machine N1 (#1 challenger) useful life = 8 years Initial Cost $15,000 MARR 18% Year Operating costs Market value EAC 1 $ 355.00 $ 8,000.00 2 $ 500.00 $ 7,000.00 3 $ 788.00 $ 6,000.00 4 $ 1,000.00 $ 5,000.00 5 $ 1,355.00 $ 4,000.00 6 $ 1,688.00 $ 3,000.00 7 $ 2,012.00 $ 1,000.00 8 $ 2,345.00 $ 0.00
(engineering economic) A contractor gets a large project that is expected to last for 10 years, during which the project takes a special tool that he does not have. There are two offers of tools to the contractor, both of which can meet their needs, namely: Determine which tool is more profitable to buy based on i = 15% by using: a. Annual Value Analysis with repeatability assumption b. Annual Value Analysis with the purchase price of alternative X at the time of replacement there is an increase of 20%
The following data relate to the operations of Shilow Company, a wholesale distributor of consumer goods: Current assets as of March 31: Cash Accounts receivable Inventory Buildings and equipment, net Accounts payable Common shares Retained earnings a. The gross margin is 25% of sales. b. Actual and budgeted sales data are as follows: March (actual) April May June $50,000 $60,000 $72,000 $ 8,000 20,000 36,000 120,000 21,750 150,000 12,250 July $90,000 $48,000 c. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at March 31 are the result of March credit sales. d. Each month's ending inventory should equal 80% of the following month's budgeted cost of goods sold. e. One-half of a month's inventory purchases is paid for in the month of purchase; the other one-half is paid for in the following month. The accounts payable at March 31 are the result of March purchases of inventory. f. Monthly expenses are as follows:…
Company B is a retailer of mobile phones in Australia that works 250 days in a year. The manager would like you to determine a minimum-cost inventory plan for an upcoming mobile phone to be launched in the market. They have collected the following information: • Annual demand: 700 phones • Phone cost: $1,793 each• Phone RRP: $1,949 each• Net weight: 169 g each • Tare weight: 61 g each• Annual inventory holding cost: 30%• Cost per order to replenish inventory: $82• Annual in-transit holding cost: 10%• Freight rate (per kg): $8.10• Freight rate (per consignment): $301.50 (i.e. handling fee, dangerous good fee, anlithium battery fee)• Time to process order for freight: 1 days • Freight transit time: 4 days Solve this problem using a non-linear programming (NLP) model and your model should generate only integer results for economic order quantity and the number of orders. 1. Economic order quantity for the phone in units and in kg 2. The total cost for purchasing the phones3. The total…
Without using excel
a) Define NPV (Net Present Value), Payback and IRR (Internal rate of Return). b) Calculate NPV of the following projects. Discount rate is 10%. c) Which project should be chosen and why? Project Mils proj A Cash flows £ proj B Year 0 Year 1 -10 2 Project Mils proj C Cash flows £ Year 0 Year 1 -10 7 Cash flows £ Project Mils Year 0 -8 Year 1 3 Year 2 Year 2 Year 2 5 5 3 Year 3 7 Year 3 2 Year 3 3