PROBLEM #7:Three alternatives to incorporate improved techniques to manufacture Vertical Axis WindTurbine have been developed and costed. Compare the alternatives below using capitalized costand an interest rate of 12% per 4,55 and determine the best alternative among the following:First AlternativeSecond Alternative Third AlternativeFirst CostPhp. 2,000.000Php 3,000,000Php 10,000,000Net income per quarterPhp. 300.000Php 100,000Php 400,000Salvage valuePhp. 50.000Php 70,000N/ALife years4800

We assumed the Interest rate is given as 12% per year compounding quarterly. therefore the quarterly…

Answered: PROBLEM #7: Three alternatives to…

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

Given the following information about possible investments and a MARR of 15% per year. Alternative A Investment Cost Annual Benefits Useful Life P250,000 P60,000 5 years a.) Which alternative is preferred, based on the LCM method? b.) Which alternative is preferred using a five-year study period. Alternative B P400,000 P40,000 P15 years
Three independent alternatives are given below. If MARR is 18%, what is your decision? A B C Initial Cost $4.50 $1.90 $1.20 Annual Revenues $4.00 $2.50 $3.00 Salvage Value $0.50 $0.90 $0.00 Annual Operating & Maintenance Costs $1.20 $1.90 $2.70 Estimated life, in years 3 Infinite
Question 1: Two mutually exclusive electricity generators are considered for purchase by XYZ company. Information relevant to compare the alternatives are summarized below. Which one should be selected for purchase using IRR method? The MARR is 10% per year. Generator A Generator B 100,000 Capital Investment (OMR) Market value at the 80,000 35,000 10,000 end of useful life (OMR) Annual fuel and 3,000 5,000 maintenance expenses (OMR) Service life 10 years 10 years Hints: You should solve using IRR only. Your answers should be presented in Wing a form of a Table. Show the iteration and interpolation procedure presented in
If the MARR=10%, compute the value of X that makes the alternatives equally desirable. Do not use spreadsheets. Alternatives Machine A Machine B First cost $12,000 $20,000 Annual Operating cost $1,400/year X Salvage value $2,000 $3,000 Life 4 years 8 years
The estimated negative cash flows for three design alternatives are shown below. The MARR is 10% per year and the study period is four years. Which alternative is best based on the IRR method? Doing nothing is not an option. Capital investment Annual expenses OA. Alternative B OB. Alternative C OC. Alternative A EOY 0 1-4 A $85,700 8,500 Alternative B $64,500 Which alternative would you choose as a base one? Choose the correct answer below. 15,150 C $71,900 12,450
A salesman offers a businessman two options for certain machine. Using the Present Value (PV) Method in determining the more economical, what is the Present Value of Option A? Assume interest is 24% cpd. a. Option A: First Cost – P203,692; Annual operating cost – P93,768; Salvage Value – P15,969; and Useful life – 4 years Option B: First Cost – P65,000; Annual operating cost – P20,000; Salvage Value – P2,500; and Useful life – 6 years
Compare the alternatives below on the basis of their capitalized costs. Assume the MARR is 10% per year, compounded annually Project A Project B Project C First cost ($200,000) ($275,000) ($800,000) Annual income $60,000 $70,000 $80,000 Salvage value $40,000 $60,000 $500,000 Life, years 4 7 infinity
Required information PEMEX, Mexico's petroleum corporation, has an estimated budget for oil and gas exploration that includes equipment for three offshore platforms as shown. Use PW analysis to select the best alternative at a MARR of 16% per year. Platform First cost, $ million Y Z -300 -450 -510 M&O, $ million per year -320 -290 -230 Salvage value, $ million 75 50 90 Estimated life, years 20 20 20 Select platform X, Y, or Z using tabulated factors. The present worth of platform X is $- 2298.4 worth of platform Z is $- 1944.14 million, the present worth of platform Y is $- 2262.15 million, and the present million. The platform selected based on the present worth is platform Z
Dexcon Technologies, Inc., is evaluating two alternatives to produce its new plastic filament with tribological (ie.. low friction) properties for creating custom bearings for 3-D printers. The estimates associated with each alternative are shown below. Using a MARR of 10% per year, which alternative has the lower present worth? Method First Cost M&O Cost, per Year Salvage Value Life DDM $-190,000 $-55,000 $4,000 2 years The present worth for the DDM method is $ The present worth for the LS method is $ The LS method is selected. LS $-430,000 $-25,000 $39,000 4 years
Solve this problem in Excel. The following two alternatives are mutually exclusive. (a) Which one will you select if your MARR is 15% per year? Use rate of return analysis. (b) Graph interest rate vs. present value for both option 1 and 2. ( c) Discuss how your selection between option 1 and 2 will change when MARR is changed and at which interest rate the two options are the same economically. Alternative Initial Cost Annual Benefit Life, years Ordinary (O) $38,000 $9,400 5 Above average (AA) $35,000 $9,000 6
A city government feels that the energy production capacity must be expanded to meet anticipated demands for energy. There are three alternatives to consider: @A nuclear facility with an investment of $250 million, operating costs of $3 million per year and life of 20 years. @ A coal plant with an investment of $200 million operating costs of $10 million per year and a life of 20 years. 26°C I P Type here to search
Compare three mutually exclusive alternatives on the basis of their capitalized costs at i =10% per year. Alternative |First cost, $ AOC, $/year Salvage value, $| Life, years B2 300,000 |-10,000 |70,000 A1 -50,000 C3 |-30,000 5,000 2 900,000| 3,000 |200,000

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS