OPTIONS: $5 $20 $0 $10 You are a hotel manager and you are considering four projects that yield dfferent payofs, depending upon whether there is an economic boom or a recession. The potentia payofs and comesponding payots are summarized in the accompanying table Recession o -10 $20 Project Boom 50 $20 -$10 $30 -530 5.50 550 The expected value of project Bis

OPTIONS: $5 $20 $0 $10 You are a hotel manager and you are considering four projects that yield dfferent payofs, depending upon whether there is an economic boom or a recession. The potentia payofs and comesponding payots are summarized in the accompanying table Recession o -10 $20 Project Boom 50 $20 -$10 $30 -530 5.50 550 The expected value of project Bis

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5-4 Solar Panel Installation A university spent $1.8 million to install solar panels atop a parking garage. These panels will have a capacity of 500 kW, have a life expectancy of 20 years and suppose the discount rate is 10%. a. If electricity can be purchased for costs of $0.10 per kWh, how many hours per year will the solar panels have to operate to make this project break even? b. If efficient systems operate for 2,400 hours per year, would the project break even? c. The university is seeking a grant to cover capital costs. How big of a grant would make this project worthwhile (to the university)?
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4.) A piece of equipment is required for a project. Consider the two options. For each option, determine the following: a. A Cash Flow Diagram b. The Present Worth for a period of ten years c. Estimated Break-Even Point I. Option 1: Initial cost to purchase is equipment is $450,000. Annual O&M costs are $1,200 per year starting at the end of the second year. Estimated annual savings for the new piece of equipment is $60,000 starting at the end of the first year. The interest rate for purchasing the equipment is 6%. The salvage value is expected to be $110,000 at the end of 8 years. II. Option 2: Leasing the new piece of equipment would cost $45,000 per year. Annual O&M costs are $1,800 per year starting at the end of the second year. Estimated annual savings for the new piece of equipment is $55,000 starting at the end of the first year. The interest rate for leasing the equipment is 6%. A credit of $4,000 is expected beginning at the fourth year for leasing the equipment.
3. Consider an individual whose income stream is (200,120) in a situation where he is faced with the choice of 3 economically independent projects, alpha, beta and gamma. The market interest rate is 50%. The cash flows for the three projects are as follows: Project Co C₁ Alpha Beta -20 24 Gamma 10 -12 a) Which projects (if any) would the individual invest in? b) How much would he end up consuming in time 0? c) How much would he end up consuming in time 1? d) Show that the individual is better off with the investments than if he just consumed according to his income pattern. -12 30
Question 6 Saved Listen Based on the net worth analysis, which of the following projects is acceptable? Assume i = 12%. Project A 11,000 4000 Project B 10,000 1200원 15,560 7000 Project C 10,500 6000 Project D 9500 n 1 -4000 |13,500 8000 12 3500 5000 -4500 6000
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A project has the cash flows shown in the cash flow diagram below, where the time periods are in years and all cash flows occur at once at the end of each year. What is the project's conventional payback period in years? a. 1 year b. 2 years c. 3 years d. 4 years e. 5 years $20K $20K $15K $15K TH 1 2 3 4 $10K $25K 5
A project consists of the following tasks, with task times in weeks. Use the data provided to identify the project's critical path. A, C, F, and G is the project's critical path. B, D, E, F, and G A, C, E, F, and G A, B, C, E, and F Task Preceding Task to B, D, F, and G ABCDEFG None None A B CH L 00 00 3 13 3 7 7 7 1829 tp 20 10 1 & 12
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Problem 2 Archibald Architecture and Erin's Engineers are two firms that are working together to build a new li- brary for the local community. They must each contribute some amount of resources to the build: Archibald will contribute a units of resources at a cost of a², and Erin will contribute e units at a cost of 2e². The final value of the build is 10(a + e -ae), which Archibald and Erin split equally, so that each receives a revenue of 5(a + e - ae). (a) Write down Archibald and Erin's payoff functions. (b) Suppose that the only resource contribution options available are 0,1 and 2. Archibald and Erin must make their decisions simultaneously without consulting one another. i. Compute the payoffs that correspond to w, x, y and z in the matrix below. Erin 1 5,3 Archibald 0 1 2 0 0, w 4,5 4,3 6,10 y, 3 2 10, x 4, -3 2,-8 ii. Is (0,0) is a Nash equilibrium in this game? Justify your assertion in no more than 25 words. iii. Is a resource contribution level of 2 rationalisable for…