2. Assume that we can estimate a project's cash flows as follows:n012345Expected Flow E(An) Estimate of Standard Deviation on$0$10$15$20$25$30-$300$120$150$150$110$100In this case, each annual flow can be represented by a random variable with known mean andvariance. Further assume complete independence among the cash flows.(a) Find the expected NPW and the variance of this project at i = 10%.(b) If all cash flows are normally distributed with the given means and variances, what is theprobability that the NPW will exceed $200?

Given: n Expected Flow (An) Estimate of Standard Deviation Present Value of the cash flow 0…

Answered: Assume that we can estimate a project's…

Business

Economics

Assume that we can estimate a project's cash flows as follows:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

In general, the IRR comparison method and the PW comparison method Question options: A produce the same decisions for independent projects but not for mutually exclusive projects B produce the same decisions for mutually exclusive projects but not for independent projects C produce different decisions for both independent projects and mutually exclusive projects D produce the same decisions for both independent projects and mutually exclusive projects E produce the same decisions for projects with unequal lives
Determine the breakeven point in terms of number of units produced per month and draw its corresponding break-even chart using the following data:➢ Selling price/unit 600 PhP➢ Total monthly overhead expenses 428,000 PhP➢ Labor cost 115 PhP➢ Cost of Materials 76 PhP➢ Other variable 2.32 Php
A construction company is evaluating the purchase of a new concrete mixer with hydraulic hopper and automatic controller. The mixer will have a first cost of BD 12,000, a life of 9 years, and no salvage value. It will require 2 operators at a cost of BD 4.500 per hour each. A total of one cubic meter of concrete can be poured each hour by the mixer. Alternatively, if human labor is used, 5 workers, each earning BD 4 per hour, are required to one cubic meter per hour. The estimated cost of the material is BD 21 per cubic meter and the MARR is 7% per year (clearly show the S.N., numeric answer, and final decision). a) Determine the minimum cubic meters per year to justify the purchase of the automatic mixer. b) The company expects to produce 140 cubic meters per year, which option should they select? Why?
Could you please tell me answer to this question, a circled or highlighted answer would be appreciated, thank you.
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.
What are the breakeven points and the range of profitability for the given total profit general equation of a product TP = -0.02D2+500D-1000?
What are the breakeven points and the range of profitability for the given total profit general equation of a product TP = -0.02D2+500D-1000?
Assume a pool of 115 people in an insurance pool (a group of people insured through community rating). It is estimated that a small number in the pool will have significant pre- existing conditions as indicated in the table. Based on the age of these 115 people, the insurance company estimates the following distribution of health care claims (which includes necessary profit and administrative costs of the insurance company). Number of Insured Antidipated Heath Costs/Year/Person $1,400 $1,500 $1,600 $1,700 $1,800 $1,900 $2,000 $2,100 $2,200 $2.300 $2,400 $2,500 $2,700 $2,000 $2,900 $3,000 $3,100 $3.200 $3.300 $4,000 57,00 $10,000 Everyone joins the poal ad pays the necessary premum in the first year. The clams experience of the customers is faund to be generaly consstent with expeclations of the insurance company. A) What would be the premium In the third year if there is no inflation, based on the company's oxperience from the past year? B) If those customers who have anticipated…
What are the breakeven points and the range of profitability for below given Total profit general equation of a product is TP = - 0.5D² + 2000D - 2000?
Consider the following investment opportunity: Capital Investment (End of Year 0) Expenses (per year) Revenues (geometric series) $450,000 $25,000 $60,000 in the first year, increasing 5% per year following Market value (End of Year 20) Study Period (years) MARR (per year) $90,000 20 years 10% 10% Interest Table
The capital investment cost for a switchgrass-fueled ethanol plant with a capacity of 250.000 gallons per year is $6.6 million. The costcapacity factor for this particular plant technology is 0.62 for capacities ranging from 200.000 gallons per year to 600.000 gallons per year. What is the estimated capital investment for a similar ethanol plant with a capac of 550.000 gallons per year? The estimated capital investment for a similar ethanol plant with a capacity of 550,000 gallons per year is $ (Round to the nearest ten thousands)