Initial cost Annual benefits ROR Life in years Alt. A $15,000 $4,500 15% Alt. B 27,000 7,600 13% 538 Alt. C 24,000 6,500 11% Reference Case Study & Determine the AROR for the second increment (Alt. B- Alt.A) if A was retained during the first incremental analysis. OA.5.78% OB. 10.85% OC.9.19% OD 8 12 % 4
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- Using Incremental with EUAW analysis find the best alternative, MARR = %10. should use Excel and show your equations seperately, see below example: [A Benefit - [IC (A/P, i%, n) - Salvage (A/F, i, n)] + A Cost+ G Cost (A/G, i, n)] A B C $2,300,000 $2,780,000 $2,540,000 $82,000 $118,000 $97,000 $580,000 $670,000 $650,000 $65,000 $78,000 $71,000 $11,000 $15,000 $12,500 9 9 9 Data First Cost Salvage Value Annual Benefit M&O M&O Gradient Useful Life, Years YouOption i C/R Option ii C/R One Time Costs One Time Costs Land-$10 million (Year 1) C Renovations- $35M (Year 0) C Construction- $100 million ($50 M per year for 2 years C Medical Equipment- $20M (Year 0) C Medical equipment- $25million (Year 0) C Licensing & Consulting- $5M (Year 0) C Licensing & Consulting- $15M (spread across year 1 and 2) C Initial Marketing Campaign- $2M (Year 1) C Initial Marketing Campaign- $5 million (Year 3) C Annual Values Annual Values Operations & Staff- $7M / year (Year 2+) C Operations & Staff- $11M / year (Year 3+) C Maintenance- $2M / year (Year 2+) C Maintenance- $2.5M / year (Year 3+) C Tech Updates- $1.2M / year (Year 3+) C Tech Updates-$1.5M / year (Year 5+) C Overhauls Overhauls Equipment Repairs- $13M (Year 10) C Equipment Repairs- $18M (Year 10) C Facilities Upgrades- $20M (Year 15) C…YOUR FATHER PLANS TO INVEST P500,000.00 IN AN AUTO WASHING MACHINE WITH THE FF DATA: (20 PTS.) WASHING CAPACITY- 12 CARS/HR AT 8HRS OPERATION/DAY FOR 6DAYS A WEEK AND 50 WEEKS/YEAR CAR WASH CHARGE-P25/CAR MANUAL LABOR COST ( 2 WORKERS)-P25/HR PER WORKER PLUS A PAID VACATION BENEFITS OF 2 WEEKS PER YEAR MAINTENANCE COST-P8500.00/MONTH DESIRED RATE OF RETURN ON THE CAPITAL-20% PRESENTLY YOUR FATHER IS EARNING P25,000.00/MONTH AS A REGULAR EMPLOYEE AND WANTS TO CONCENTRATE ON THIS BUSINESS AND WANT TO RECOVER HIS INVESTMENT IN 5 YEARS. USING ROR AND AW METHOD OF ECONOMY STUDIES, SHOULD YOUR FATHER PROCEED WITH THE INVESTMENT?
- Jane has $240,000 to invest and is considering the following two investment opportunities.Investment A requires an initial investment of $240,000 and promises to return $57,040 every year for 5 years.Investment B requires an initial investment of $216,000 and is expected to return $51,200 every year for 5years. If Jane’s MARR is 5% per year compounded annually, which investment should she choose, if any?Zetterberg Builders is given two options for making payments on a brush hog. Find the value of X such that they would be indifferent between the two cash flow profiles if their TVOM is 14.5% per year compounded yearly. End of Year Series 1 Series 2 $0 $0 $275 1 $325 2 $375 $35X 3 $425 $25X 4 $0 $15X 5 $0 $5X Value of X: $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is +4.(b) Over the past 8 years, PQR Sdn Bhd has placed varying sums of money into a special capital accumulation fund. The company sells compost produced by garbage-to- compost plants in Malaysia and Indonesia. Figure Q2(b) is the cash flow diagram represent the value of funding. RM 1,000 1 2 RM 3,000 3 4 5 Figure Q2(b) 6 F =? 7 8 RM 1,500 Determine the amount in the account (year 8) using an effective interest method with an interest rate of 10% per year, compounded semi-annually
- Street lighting fixtures and their sodium vapor bulbs for a two-block area of a large city need to be installed at a first cost (investment cost) of $130,000. Annual maintenance expenses are expected to be$6,500for the first8years and$8,500 each year thereafter upto 25years. With an interest rate of 9% per year, what is the present worth cost of this project? Choose the closest answer below. A) $202,422 B $238,597 C) $249,468 D) $277,339The survey firm of Layer, Anderson, and Pope (MAP) LLP is considering the purchase of a pieceof new GPS equipment. Data concerning the alternative under consideration are presented below.First Cost $28,000Annual Income 7,000Annual Costs 2,500Recalibration at end of Year 4 4,000Salvage Value 2,800If the equipment has a life of eight years and MAP’s minimum attractive rate of return (MARR) is5%, what is the annual worth of the equipment?What is the payback period according to the attached table? Period Cash Flow MARR Cost of Fund Payments Commulative C.F. (4,000,000) (4,000,000) (3,980,000) (3,957,600) (3,932,512) (3,404,413) 6. (4,000,000) (3,980,000) (3,957,600) (3,932,512) (3,404,413) (2,812,943) (2,150,496) (908,556) 12% 12% 12% 12% 1 (480,000) (477,600) (474,912) (471,901) (408,530) (337,553) (258,060) (109,027) 57,890 500,000 2 500,000 3 500,000 4. 1,000,000 5. 12% 1,000,000 (2,812,943) (2,150,496) (908,556) 12% 1,000,000 1,500,000 1,500,000 1,500,000 7. 12% 12% 12% 12% 8 482,418 2,040,308 3,785,145 482,418 10 2,040,308 244,837 1,500,000 O a. 10 years Ob. 3 years 5 years O d. 8 years Oe. None of the above
- A new permanent endowment at the University of Alabama will award scholarships to engineering students twice per year (end of June and end ofDecember). The first awards are to be made beginning 5-1⁄2 years after the $20 million lump sum donation is made. If the interest from the endowment is intended to fund 100 students each semester in the amount of $5000 twice per year, what semiannual rate of return must the endowment fund earn?YOUR FATHER PLANS TO INVEST P500,000.00 IN AN AUTO WASHING MACHINE WITH THE FF DATA: WASHING CAPACITY- 12 CARS/HR AT 8HRS OPERATION/DAY FOR 6DAYS A WEEK AND 50 WEEKS/YEAR CAR WASH CHARGE-P25/CAR MANUAL LABOR COST (2 WORKERS)-P25/HR PER WORKER PLUS A PAID VACATION BENEFITS OF 2 WEEKS PER YEAR MAINTENANCE COST-P8500.00/MONTH DESIRED RATE OF RETURN ON THE CAPITAL-20% PRESENTLY YOUR FATHER IS EARNING P25,000.00/MONTH AS A REGULAR EMPLOYEE AND WANTS TO CONCENTRATE ON THIS BUSINESS AND WANT TO RECOVER HIS INVESTMENT IN 5 YEARS. USING ROR AND AW METHOD OF ECONOMY STUDIES, SHOULD YOUR FATHER PROCEED WITH THE INVESTMENT?Army Research Laboratory scientists developed a diffusion-enhanced adhesion process which is expected to significantly improve the performance of multifunction hybrid composites. NASA engineers estimate that composites made using the new process will result in savings in space exploration projects. The cash flows for one project are estimated. Determine the rate of return per year. Year, t Cost ($1000) Savings ($1000) 0 −210 — 1 −150 — 2–5 — 100 + 60(t − 2)