EUAW Selection Example • You wish to select from three mutually exclusive alternatives. Which is the best using the EUAW? MARR is 8%. t 0 1-14 15 Alt A2t A3t -75,000 -125,000 -100,000 23,000 28,000 25,500 68,000 53,000 60,500

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The following four alternative investments are being compared at MARR of 12%. Which investment is the most economical over the entire service life? Alt. L Alt. W 10 10 $590,000 $645,000 Alt. D 10 $495,000 14.2% 9 13.4% 15% 6 5 Service life (years) Net PW IRR Disc payback period (yrs) Alt. X 10 $533,000 16.2% 8 OA. Alternative D because it has the longest payback period OB. Alternative W because it has the highest net PW OO C. Alternative L because it has the shortest payback period OD. Alternative X because it has the highest IRR

Mother E, a business selling specialized helmet, has a carrying cost of P70 per unit per order. In order to satisfy the customers coming from various places, they order every 4 months. The stockout cost is P50 per unit per year. The following are the demand for specialized helmet Demand during lead time Probability 50 .1 60 .2 70 .2 80 .2 90 .1 The reorder point is 70 units. What level of safety stock should be maintained?

Alternative 3 is incorrect  EUAC=( Equivalent Annaul COst of Initial Investment)+ (Expected Moderate annaual flood damage cost )+ (expected severe annaual flood cost )

Chemitronix Ltd. is a microchips manufacturing company. It was found that the business is at the maturity stage, demanding some change. After rigorous research, management came up with the following decision variables.Expansion: 45% chance of gaining 1,500,00; 55% chance of losing XNew Product: 50% chance of gaining 900,000; 50% chance of losing 539740What must have been the value of expansion loss if expansion and new product will result to the same expected monetary values?

A European consortium has spent a considerable amount of time andmoney developing a new supersonic aircraft. The aircraft gets high markson all performance measures except noise. In fact, because of the noise,the consortium’s management is concerned that the U.S. government mayimpose restrictions on some of the American airports where the aircraftcan land. Management judges a 50–50 chance that there will be somerestrictions. Without restrictions, management estimates its (presentdiscounted) profit at $125 million; with restrictions, its profit would beonly $25 million. Management must decide now, before knowing thegovernment’s decision, whether to redesign parts of the aircraft to solvethe noise problem. The cost of the redesign program is $25 million. Thereis a .6 chance that the redesign program will solve the noise problem (inwhich case, full landing rights are a certainty) and a .4 chance it will fail. Using a decision tree, determine the consortium’s best course ofaction, assuming…

A new manufacturing line is being built and your team has narrowed it down to 2 options. Which one is the best option using a 20% rate to evaluate each option? Answer the question by entering the amount of savings by choosing the best option. Margin of error: +/- 10 Enter your answer as a positive number representing savings from one option to another. Hint: When you use Net present Worth Analysis you must must LCM of the lives to assess each option over the same period. Option A B Operating First and Salvage Cost Maintenance Value Cost/Yr $18M $5M $25M $3M 501,025 $4M $6M Life 10 years 20 years

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Assume MARR -20%, and five independent projects are available with ROR values of A 22%, B19% C-33, D I20.5%, E-18.5% which projects should be selected Only A and C Only D and B O Only C Only A. C, and D