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Three public investment alternatives are available: A1, A2, and A3. Their respective total benefits, costs, and first costs are given in present worth as follows:
These alternatives have the same service life. Assuming that there is no donothing alternative, which project would you select, calculating on the basis of the benefit-cost ratio on incremental investment (BC(i))?
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- The construction cost of the bypass is $20 million, and $500,000 would be required each year for annual maintenance. The annual benefits to the public have been estimated to be $2.7 million. If the study period is 50 years and the state’s interest rate is 8% per year, should the bypass be constructed?For the four alternatives described in the table, which project or projects should be selected, using ROR method and MARR of 13% ? (Use only capital letters for alternatives names exactly as in table. For Ai*, use number followed by % immediately (no space)) 1- if they are independents: 2- If they are mutually exclusive: fill in the steps below based on the comparison with MARR = 13% Step 1: Exclude alternative Overall Incremental Rate of Return, % ROR, % A from competition First Alternative Cost, $ B D -80.000 14 -60.000 16 12 Step 2: |(challenger) VS|| -40.000 17 11 14 17 23 D -30,000 12 35 (defender), Ai* = -----> select Step 3: ( challenger) VS (defender), Ai* = selectThe state of Glottamora has $300 million remaining in its budget for the current year. One alternative is to give Glottamorans a one-time tax rebate. Alternatively, two proposals have been made for state expenditures of these funds. The first proposed project is to invest in a new power plant, costing $300 million and having an expected useful life of 20 years. Projected benefits of the new power plant are as follows: Years Benefits per Year ($ Millions) 1 - 5 0 6 - 20 60 The second alternative is to undertake a job retraining program, also costing $100 million and generating the following benefits: Years Benefits per Year ($ Millions) 1 - 5 60 6 - 10 42 11 - 20 12 The state Power Department argues that a 5 percent discount factor should be used in evaluating the projects because that is the government’s borrowing rate. The Human Resources Department suggests using a 12 percent rate because that more nearly equals society’s true…
- The Logan Well Services Group is considering two sites for storage and recovery of reclaimed water. The mountain site (MS) will use injection wells that cost $4.2 million to develop and $280,000 per year for M&O. This site will be able to accommodate 150 million gallons per year. The valley site (VS) will involve recharge basins that cost $11 million to construct and $400,000 per year to operate and maintain. At this site, 720 million gallons can be injected each year. If the value of the injected water is $3.00 per thousand gallons, which alternative, if either, should be selected according to the B/C ratio method? Use an interest rate of 8% per year and a 20-year study period. The B/C ratio is . Select alternative (Click to select) neither of the alternatives mountain site valley site .Two mutually exclusive design alternatives are being considered. The estimated cash flows for each alternative are given below. The MARR is 12% per year. The decision-maker can select one of these alternatives or decide to select none of them. Make a recommendation based on the following methods. Design Y a. Based on PW method, Design is more economical. b. The modified B/C ratio of Design Y is The modified B/C ration of Design Z is c. The incremental B/C ratio is (Round to two decimal places) Therefore, based on the B/C ratio method, Design Investment cost Annual revenue Annual cost Useful life Salvage value (Round to two decimal places) (Round to two decimal places) d. The discounted payback period of Design Y is The discounted payback period of Design Z is Net PW is is more economical years (Round to one decimal place) years (Round to one decimal place) $140,000 $51,725 $9,672 15 years $14,700 $149,103 Design Z $275,000 $84,946 $18,059 15 years $33,000 $186,587 Therefore, based on…Six projects have been identified for possible implementation by a company that makes dry ice blasters, machines that propel tiny dry ice pellets at supersonic speeds so they flash freeze and then lift grime, paint, rust, mold, asphalt, and other contaminants off in-place machines and a wide range of surfaces. The present worth of each project has been determined. Identify all acceptable mutually exclusive bundles if the budget limitation is $32,000. Arrange the acceptable bundles in such a way that the total PW values are in ascending order. Project Project PW at 15%, $ L 29,000 M 11,000 N 41,000 O 35,000 P 6,000 Q 2,000
- Solve and show solutions completely. Draw the cash flow diagrams. The engineer of a medium scale industry was instructed to prepare two plans to be considered by management to improve their operations. Plan A calls for an initial investment of P200,000 now with an expected salvage of 20% of the first cost 20 years hence. The operation and maintenance disbursements are estimated to be P15,000 each year and taxes will be 2% of the first cost. Plan B calls for an immediate investment of P140,000 and a second investment of P160,000 eight years later. The operation maintenance disbursements will be P9,000 a year for the initial installation and P8,000 a year for the second installation. At the end of 20 years, the salvage value will be 20% of the investments. Taxes will be 2% of first cost. If money is worth12%, which plan will you recommend using present worth cost method.Consider the following mutually exclusive alternatives: Alternative A Alternative B Capital investment $473,000 $1,114,000 Net annual receipts $104,100 $235,000 Both alternatives have a useful life of 20 years and no market value at that time. The MARR is 20 % per year. Determine the annual worth (AW) of the most profitable course of action. (Enter your answer as a number without the dollar sign.)Two investment projects are being evaluated based on their payback periods. The first alternative requires an initial investment of $520,000, has gross revenues of $85,000, annual O&M costs of $17,000 and a service life of 23 years. What is the project's discounted payback period if the MARR is 10% per year? OA. 8.8 years OB. 19.1 years OC. 15.2 years OD. 9.9 years If the second alternative has a payback period of 20 years, which alternative should be preferred based on the payback period? OA. The second alternative OB. The first alternative
- An electric utility is taking bids for the purchase, installation, and operation of decentralized battery storage systems. The table below has some details for the two bids received. a) Which is the most economical bid if the rate is 11%. None of the batteries are expected to have a salvage value after 30 years of use. (Actual expected service life is listed in the bid) b) Also solve using NPW method to compare these two mutually exclusive plans Equipment cost Installation cost Annual Inspection and Maintenance fee Annual extra income taxes Life Salvage Value Bid A $112,000 $25,000 $2,000 0 40 years 0 Bid B $98,000 $30,000 $2,000 $800 35 years 0Five mutually exclusive alternatives are being considered for providing a sewage- treatment facility. The annual equivalent costs and estimated benefits of the alternatives are as follows: Alternative E Annual Equivalent (in thousands) Cost $1,050 Benefits $1,110 900 $1,810 1,230 $1,390 1,350 $1,500 990 $1,140 Which plan, if any, should be adopted if the Sewage Authority wishes to invest if, and only if, the B-C ratio is at least 1.0.?answer with cash flow diagram