**Project Estimates Overview****Most likely estimates for a project are as follows:**- **MARR (Minimum Acceptable Rate of Return):** 12% per year- **Useful life:** 14 years- **Initial investment:** $5,500- **Receipts – Expenses (R – E):** $1,000/year**Interactive Elements:**- **Graph Icon:** Click to view the relationship between the present worth (PW) and the percent change in parameters.- **Table Icon:** Click to view the interest and annuity table for discrete compounding when the MARR is 12% per year.**Questions for Analysis:**(a) Determine whether the statement, "An initial investment of $7,150 keeps the investment economical," is true or false.- ○ True- ○ False(b) To which variable is the PW most sensitive?- ○ A. Useful life- ○ B. Receipts – Expenses- ○ C. Initial Investment

Initial Investment = 5500R-E = 1000 per yearn = 14,r = 12%

Answered: Most likely estimates for a project are…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The required investment cost of a new, large shopping center is $49 million. The salvage value of the project is estimated to be $20 million (the value of the land). The project's life is 17 years and the annual operating expenses are estimated to be $14 million. The MARR for such projects is 22% per year. What must the minimum annual revenue be to make the shopping center a worthwhile venture? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 22% per year. To make the shopping center a worthwhile venture, the minimum annual revenue must be $ million per year. (Round to three decimal places.)
Self-tightening wedge grips are designed for tensile testing applications up to 1200 pounds.The cash flow associated with the product is shown below. Determine the cumulative cash flow after year 4. Year Revenue, $ Costs, $ 1 7,000 -14,000 The cumulative cash flow after year 4 is $ 2 17,000 -30,000 3 23,000 -22,000 4 19,000 -6,000
Present worth
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Kim has $35057 to invest for 10 years. She has the following options: [A]term deposit at 5% compounded annually; [B] Shares, paying a rate of 4.98% per annum with dividend paid quarterly; and [C] A building society account, paying a return of 5.06% per annum with monthly rests. Advise Kim on which option to take if all the investments are equally secure. Calculate all the resulting values per situation
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?
An electronics firm is planning to manutacture a new handheid gaming device tor the preteen market The data have been estimated tor the product Assuming a negligible market (salvage) value tor the equipment at the end of tive years, determine the breakeven annual sales volume for this product. E Click the icon to view the data estimated for the product A Click the icon to view the interest and annuity table for discrete compounding when i= 15% per year. The breakeven annual sales volume is 5000 units. (Round to the nearest whole number) More Info Sales price $12.50 per unit Equipment cost Ovorhoad cost Operating and maintenance cost Production lime per 1,000 units Study period (planning horizon) $200,000 $50.000 per yoar $25 per operating hour 100 hours 5 years 15% per year MARR
The future worth of a project with initial cost P, positive annual cash flows of A, salvage value S, and interest rate of i over a life of n years can be calculated using which statement? (a) FW = −P(F/P, i%, n) + A(F/A, i%, n) + S(F/P, i%, n) (b) FW = P(F/P, i%, n) + A(F/A, i%, n) + S (c) FW = −P(P/F, i%, n) + A(F/A, i%, n) − A[(P/A, i%, n) + S (d) FW = −P(F/P, i%, n) + A(F/A, i%, n) + S?
Problem #2 Solve for the following: 1) Present worth equivalence 2) Annual worth equivalence spread from years 1 to 10 3) Future worth equivalence at the end of year 8 4) Future worth equivalence at the end of year 10 i= 10% 10 A = $3000 P=?
You are asked to decide between two projects based on annual equivalent worth. A - $10,000 - $12,000 $6,000 $7,000 $5,000 $8,000 $4,000 Click the icon to view the interest factors for discrete compounding when i= 10% per year. (a) What assumptions do you need to make in comparing these mutually exclusive revenue projects? Select all that apply. O A. These two projects will be available in the future without significant changes in revenue expectations. B. The current projects are expected to continue for an indefinite period. O C. The two projects will be available in the future at the increasing cost. O D. The salvage values of two projects are the same.

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