!Required informationAn airport Baggage Handing Department has evaluated two proposals for baggage delivery conveyor systems. A presentworth analysis at i = 15% per year of estimated revenues and costs resulted in PWA = $460,000 and PWB = $395,000. Inaddition to this economic measure, three more attributes were independently assigned a relative importance score from 0to 100 by the department manager and a senior team supervisor.Importance ScoresManager45AttributeEconomicsDurabilitySafetyMaintainability353020AttributeEconomicsDurabilitySafetyMaintainabilitySeparately, you have used the four attributes to value rate the two proposals on a scale of 0 to 1.0 as shown in thefollowing table. (The economic attribute was rated using the PW values.)Value RatingProposal A1.000.351.000.25Importance ScoresSupervisor4035Select the better proposal using the following method.Weighted evaluation of the department manager's method.The value of R; for A isThe value of R¡ for BisThe better proposal is (Click to select)2515Value RatingProposal B0.900.500.201.00

In the above table, scores to each attribute is given as per the manager and supervisor. In the…

An airport Baggage Handing Department has evaluated two proposals for baggage delivery conveyor systems. A present worth analysis at i = 15% per year of estimated revenues and costs resulted in PWA = $460,000 and PWB = $395,000. In addition to this economic measure, three more attributes were independently assigned a relative importance score from 0 to 100 by the department manager and a senior team supervisor. Importance Scores Manager 45 35 30 20 Attribute Economics Durability Safety Maintainability Importance Scores Supervisor 40 35 25 15 Separately, you have used the four attributes to value rate the two proposals on a scale of 0 to 1.0 as shown in the following table. (The economic attribute was rated using the PW values.)

An airport Baggage Handing Department has evaluated two proposals for baggage delivery conveyor systems. A present worth analysis at i = 15% per year of estimated revenues and costs resulted in PWA = $460,000 and PWB = $395,000. In addition to this economic measure, three more attributes were independently assigned a relative importance score from 0 to 100 by the department manager and a senior team supervisor. Importance Scores Manager 45 35 30 20 Attribute Economics Durability Safety Maintainability Importance Scores Supervisor 40 35 25 15 Separately, you have used the four attributes to value rate the two proposals on a scale of 0 to 1.0 as shown in the following table. (The economic attribute was rated using the PW values.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In conducting a sensitivity analysis of a proposed project, the present worth values of $–10,000, $40,000, and $50,000 were believed to have chances of 25%, 40%, and 35%, respectively. The expected PW is closest to: (a) $19,000 (b) $26,000 (c) $28,500 (d) $31,000
The El Dorado Star is the only newspaper in El Dorado, New Mexico. Certainly, the Star competes with The Wall Street Journal, USA Today, and the New York Times for national news reporting, but the Star offers readers stories of local interest, such as local news, weather, high-school sporting events, and so on. The El Dorado Star faces the revenue and cost schedules shown in the spreadsheet that follows: A template for the spreadsheet is provided in the Course Materials. You may download my template or create your own. Since we are using dollars and cents, be sure to go out two decimal places on your calculations. Add columns to show, respectively, marginal cost (MC), marginal revenue (MR), and total profit. Create a new spreadsheet in which total fixed cost increases to $5,000. What price should the manager charge? How many papers should be sold in the short run?
Using Annual Worth Cost Method The engineer of a medium-scale industry was instructed to prepare at least two plans which is to be considered by management for the improvement of their operations. Plan A calls for an initial investment of 200,000 pesos now with a prospective salvage value of 20% of the first cost 20 years hence. The operation and maintenance disbursements are estimated to be 15,000 per year and taxes will be 2% of the first cost. Plan B calls for an immediate investment of 140,000 pesos and a second investment of 160,000 eight years later. The operation and maintenance disbursements will be 9,000 a year for the initial installation and 8,000 a year for the second installation. At the end of 20 years the salvage value shall be 20% of the investments. Taxes will be 2% of the first cost. If money is worth 12%, which plan would you recommend?
(b) AVILA Construction Sdn Bhd plans to buy a new truck crane. There are THREE (3) alternative brands to be evaluated in terms of cost estimation as shown in Table Q1(b). Given the MARR is 18% per annum. Noted that L3D represents the Last Three Digit of student matric number. Table Q1(b): Manufacturers, lives and costs of three lined slurry pump COST ITEMS SANI SANE SANU Capital Investment RM 28,000 + (1000 x L3D) RM 49,000 + RM 84,000 (1000 x L3D) +(1000 x L3D) Annual Expenses: RM 1,500 per RM 1,000 in year RM 2,000 in year 1, 1, and increasing RM 400/yr thereafter Maintenance and increasing RM 350/yr thereafter year Useful life (years) Market Value (Disposal Cost) 8. 4 RM 10,000 RM 20,000 RM 10,000 (i) Draw cash-flow diagram for each machine. (ii) Apply the private project evaluation method to compare the annual worth, AW for each machine.
A decision tree includes all of the following except: (a) Probability estimates for each outcome (b) Measure of worth as the selection criterion (c) Expected results from a decision at each stage (d) The MARR
The sheriff of Los Lunas county along the Arizona- Mexico border asked the county to build a new minimum security detention facility for personscaught while attempting to enter the United States illegally. The construction cost will be $22 million, with annual operating costs of $2.1 million. The new facility will create jobs that produce benefits for many local businesses including realtors, restaurants, etc. The benefits are estimated to be $5 million in years 1 and 2, $2.8 million in year 3, and $1.12 million per year beginning in year 4 and continuing through the 30-year life of the facility. At a discount rate of 8% per year, does the conventional B/C ratio indicate that the project is economically justified?
A biofuel subsidiary of Petrofac, Inc. is planning to borrow $12 million to acquire a small technology-based company. The rate of interest on a 5-year loan is highly variable; it could be as low as 7% or as high as 15%, but it is expected to be 10% per year. The company will only move forward with the acquisition offer if the AW is below $6 million. The M&O cost is fixed at $3.1 million per year. The anticipated sales price of the company could be $2 million if the interest rate is 7%, or as much as $2.5 million if the rate is 15%, but will most likely be about $2.45 million at a rate of 10% per year. Is the decision to move forward with the acquisition sensitive to the loan's interest rate and salvage value estimates? The annual worth with a rate of 7% is $ The annual worth with a rate of 10% is $ The annual worth with a rate of 15 % is $
The El Dorado Star is the only newspaper in El Dorado, New Mexico. Certainly, the Star competes with The Wall Street Journal, USA Today, and the New York Times for national news reporting, but the Star offers readers stories of local interest, such as local news, weather, high-school sporting events, and so on. The El Dorado Star faces the revenue and cost schedules shown in the spreadsheet that follows: A template for the spreadsheet is provided in the Course Materials. You may download my template or create your own. Since we are using dollars and cents, be sure to go out two decimal places on your calculations. Add columns to show, respectively, marginal cost (MC), marginal revenue (MR), and total profit. Two firms, Small and Large, compete by price. Each can choose either a low price or a high price. The following payoff table shows the profit (in thousands of dollars) each firm would earn in each of the four possible decision situations: a) Is there a dominant strategy for…
All of the following are steps in the procedure for conducting a sensitivity analysis, except: (a) Determine which parameters might vary from the most likely estimated value (b) Change the parameters in the range of −100% to +100% (c) Select a measure of worth (d) Compute the results for each parameter using the measure of worth as a basis
The El Dorado Star is the only newspaper in El Dorado, New Mexico. Certainly, the Star competes with The Wall Street Journal, USA Today, and the New York Times for national news reporting, but the Star offers readers stories of local interest, such as local news, weather, high-school sporting events, and so on. The El Dorado Star faces the revenue and cost schedules shown in the spreadsheet that follows: A template for the spreadsheet is provided in the Course Materials. You may download my template or create your own. Since we are using dollars and cents, be sure to go out two decimal places on your calculations. Add columns to show, respectively, marginal cost (MC), marginal revenue (MR), and total profit. What is the total fixed cost for the El Dorado Star? Explain how you arrived at this conclusion.
Oil from a specific type of marine microalgae can be converted into biodiesel that may serve as an alternate transportable fuel for automobiles and trucks. If lined ponds are used to grow the algae, the construction cost is $13 million and the M&O cost is estimated at $2.1 million per year. Alternatively, if long plastic tubes are used for growing the algae, the initial cost will be higher at $18 million, but less contamination will render the M&O cost lower at $0.41 million per year. At an interest rate of 10% per year and a 5-year project period, which system is better—ponds or tubes? Use a present worth analysis.
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