Calculate the modified benefit-cost ratio for the alternative: Initial Investment Cost : 350000 Revenues : 150000 Costs : 55000 Salvage : 120000 n : 7 MARR : 0.1 a.1.4599 b.1.4101 c.1.6035 d.1.7354 e.1.6480
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Calculate the modified benefit-cost ratio for the alternative:
Initial Investment Cost : 350000
Revenues : 150000
Costs : 55000
Salvage : 120000
n : 7
MARR : 0.1
a.1.4599
b.1.4101
c.1.6035
d.1.7354
e.1.6480
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- Consider the following teo mutually exclusive projects X 20600, 9000 9400 8950 Y 20600 10400 7950 8850 calculate the irr for each project, what is the crossover rate, what is the npv of the projects x and y with a discount rate of 0, 15, and 25%i=15% n=7 Initial Cost (A)100 (B)60 (C)80 Uniform Annual Benefit (A)26 (B)15 (C)17 a) Payback period : b) B/C: c) The best alternative based on ΔB/ΔC? please do fast asapFive alternatives are being evaluated by the incremental rate of return method. Incremental Rate of Return, % Initial Alternative Investment, $ versus DN, % A Overall ROR B CDE A 9.6 27.3 9.4 35.3 25.0 -25,000 -35,000 -40,000 -60,000 38.5 24.4 46.5 27.3 B. 15.1 - C 13.4 - D 25.4 6.8 - 75,000 20.2 (SO2PI1) If the projects above are mutually exclusive and the MARR is 20% per year, the best alternative is Select one: O a B ObC OcD OdE
- Problem 4 (Target Costing, Strategy) Benchmark Industries manufactures large workbenches for industrial use. Wally Garcia, the vice president for marketing at Benchmark, has concluded from his market analysis that sales are dwindling for Benchmark's standard table because of aggressive pricing by competitors. Benchmark's table sells for P875 whereas the competition's comparable table is selling in the P80Q range. Garcia has determined that dropping price to P800 is necessary to regain the firm's annual market share of 10,000 tables. Cost data based on sales of 10,000 tables are: Budgeted Amount 400,000 sq. ft. 85,000 hrs. 30,000 hrs 320,000 hrs. Actual Amount Actual Cost 425,000 sq. ft. 100,000 hrs. 30,000 hrs. 320,000 hrs. Direct materials P2,700,000 1,000,000 300,000 4,000,000 Direct labor Machine setups Mechanical assemblyWhich alternative should be selected using incremental rate of return analysis, if MARR = 12.0%? First cost Annual benefit Life ROR Do-nothing 0 10 yrs A B $6,500 $3,500 1,246 765 с D $7,500 $5,000 1,523 779 14.0% 17.5% 15.5% 9.0% B, because its ROR is the highest something other than C, because C costs the most initially C because C has the highest annual benefit C, because the C-B increment has a ROR of 13.70% and the A-B increment has a ROR of 9.66%if program X cost is 6000 $ and benefit 8000 $ and program Y cost is 4000 $ and benefit is 6000 $ find net benefit, net cost, benefit to cost ratio and cost to benefit ration for program X and Y Select one: О а. Х- 2000, -2000, 1.5, 0.75 Y= 2000, -2000, 1.5 and 0.75 O b. X= 2000, 2000, 1.5, 0.75 Y= 2000, -2000, 1.5 and 0.75 О с. Х- 2000, -2000, 1.5, 0.75 Y= 4000, -2000, 1.75 and 0.75 O d. X= 2000, -2000, 1.5, 1.75 Y= 2000, 2000, 1.98 and 0.75
- 4. Compare between the next two alternatives by using and A(B – D)/C ratio (consider i = 10%) Alternative Y First cost, $ M&O costs, $lyear Benefits, $lyear Disbenefits, $lyear Life, years 360,000 50,000 120,000 30,000 8 640,000 40,000 160,000 55,000 16Two alternatives are being considered: First cost Uniform annual benefit Useful life, in years If the minimum attractive rate of return is 7%, which alternative should be selected? Solution: 2. Terms n= 8 1. Use the increment analysis, we should use B-A ο ΔΑΞ A 3. The Increment CFD has 3 basic patterns: ο ΔΡ= ο ΔΕΞ 4. AROR= 8.32 % 5. Choose B 5400 9800 1750 1850 4 8 B occurred at end of year 4Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3. Using the Laplace criterion, what would be the highest expected payoff? S1 S2 S3 A $100 145 120 B $75 125 110 C $95 85 60
- C1 = 68100C2 =91200R = 45100 A ) Select the best project using Return on Investment ROI ( Rate of Return ) method the data of both projects are shown the table below. B ) Compare the effect of decrease in revenues of Annual revenues of 5 % on the rate of return for project Y ( calculate the % of change in ROI ).Wallace Company is considering two projects. Their required rate of return is 10%. Which of the two projects, A or B, is better in terms of internal rate of return?9.36 The fouT mutuzlly exclusive alternatives below are being compared using the B/C method. What altemative, if any, should be selected? Initial Investment, Incremental B/C When Compared With Altemative Altemative S Millions BC Ratio K L 20 0.40 --- 25 33 0.96 122 K 1.42 2.14 --- 0.72 0.80 0.08-- 45 0.39 I. Activate Winde PC settings to DFocus SAN FRACISCO.CA
