For its computer assembly business, Kento Electronics is thinking about purchasing a more advanced equipment. Consideration is given to five models (J, K, L, M, and N) with various attributes. The following table lists the expected cash flows associated with each model: n 0 1 2 3 4 5 6 J -P 2,700,000 700,000 700,000 700,000 800,000 800,000 1.300.000 K -P 1,700,000 420,000 420,000 420,000 420,000 420,000 800.000 L -P 2,000,000 560,000 560,000 560,000 560,000 560,000 980.000 M -P 1,500,000 350,000 350,000 350,000 300,000 300,000 600.000 N -P 2,300,000 640,000 650,000 660,000 670,000 680,000 1.130.000

For its computer assembly business, Kento Electronics is thinking about purchasing a more advanced equipment. Consideration is given to five models (J, K, L, M, and N) with various attributes. The following table lists the expected cash flows associated with each model: n 0 1 2 3 4 5 6 J -P 2,700,000 700,000 700,000 700,000 800,000 800,000 1.300.000 K -P 1,700,000 420,000 420,000 420,000 420,000 420,000 800.000 L -P 2,000,000 560,000 560,000 560,000 560,000 560,000 980.000 M -P 1,500,000 350,000 350,000 350,000 300,000 300,000 600.000 N -P 2,300,000 640,000 650,000 660,000 670,000 680,000 1.130.000

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

Mr. Garcia sold his machine for P20,000 after using it for 6 years. He bought a new machine worth 75,000 with an expected life of 12 years and a salvage value of 2,000. The operating cost is P5,500 per year. The old machine which he bought for P50,000 when new will be useful for 10 years and a junk value of 1,000 but because of appropriate maintenance, it will be useful for another 5 years, no salvage value, with an annual operating cost of twice the new one. If money is worth 12%, was the engineer justified in selling the old machine? Use the ROR method. Show complete solution. Thank you
DRAW CASH FLOW DIAGRAM Calculate the capitalized cost of a project that has an initial cost of P8,000,000 and an additional cost of P250,000 at the end of every 8 years. The annual operating costs will be P150,000 at the end of every year for the first 5 years and P200,000 thereafter. In addition there is expected to be recurring major rework cost of P500,000 every 13 years. Assume i=12%
Can you compute the PW of alternative A, the AW of alternative B, the FW of Alternative C, and the PW of alternative D? Also for a MARR of 12%, rank the MEAs from most profitable to least profitable. HINT: You will need to perform additional calculations before answering this question.
Calculate the capitalized cost of a project that has an initial cost of P3500000 and an additional investment cost of P950000 at the end of every 8 years. The annual operating cost will be P120000 at the end of every year for the first 5 years and P150000 thereafter. In addition there is expected to be a replacement cost of P350000 every 12 years. The interest rate is 12%. Also show the cash flow diagram.
To compare the machines on the basis of present worth analysis, the present worth values to use are: (Include answer, diagram, procedure, and result) O PWx = $31,139, PWy = $43.066 O PWX =$31,139, PWy= $37,461 O PWx= $54,533, PWy = $43,066 O PWx = $54,533. PWy = $37,461
11-8. The Ford Motor Company is considering three mutually exclusive electronic stability control systems for protection against rollover of its automobiles. The investment (study) period is four years, and MARR is 12% per year. Data for the fixture costs of the systems are as follows. Alternatives В Annual savings MV (after 4 years) Capital investment $12,000 $15,800 $8,000 $4,000 $5,200 $3,000 $3,500 $1,500 $3,000 IRR 19.2% 18% 23% Plot the AW of each alternative against MARR as the MARR varies across this range: 4%, 8%, 12%, 16%, and 20%. What can you generalize about the range of the MARR for which each alternative is preferred? (11.2)
S
A man is considering putting up his own enterprise, where an investment of 800,000 will be required and will take 15 years to recoup. He estimates his annual sales at 800,000 along with the following operating costs. Materials =160,000/ yearLabor = 280,000/ yearOverhead = (40,000 + 10% of sales)/ yearSelling Expense = 60,000/ yearThe man will give up his regular job paying 216,000 Php per year and devote all his time to the operation of his business, this will result in decreasing his labor cost by 40,000 per year, material cost by 28,000 per year and overhead cost by 32,000 per year. If the man expects to earn at least 20% of his capital, should he invest? Solve using a) Rate of return method b) annual worth method c)present worth method d)equivalent uniform annual cost method
Which of the following interpretations would be best for the scenario analysis results shown below? Worst- case PW (18%) -$650,000 IRR 2.10% Most- likely case Best-case $58,000 $2,660,000 33% 14.60% a. Since the most-likely case has a PW <0, the project should be abandoned immediately b. Since the worst-case has a negative present worth, this project must be rejected. c. Since the average of the three cases is a positive present worth, the project is acceptable. d. Because only one of the scenarios shows the project as profitable, the project should be considered very risky, and, if accepted, should be subject to greater scrutiny in its planning and forecasting.
MARR is 8%
An appliance manufacturing company intends to produce three models of electric fans. These models are the Stand Fan, Wall Fan, and Ceiling Fan. The table below shows the available information on these three models. Stand Fan P 750.00 P 300.00 How many units of each model should be sold each month to breakeven? Type of Cost Selling Price/Unit Variable Cost/Unit Wall Fan P 500.00 P 250.00 Ceiling Fan P 1,000.00 P 500.00 What are the breakeven sales each month?