Q1: A company is going to install a new asphalt plants. Three different type of plants are available. The essential differences in first cost, salvage value and expenditures are shown below. Asphalt Plant types (proposals) Speedy Investment cost (million IQD) Useful life (year) 100 Annual disbursement(million IQD) Salvage value (millionIQD) 10 50 20 Each plants will produce the same quantity of asphalt. Any capital invested in this company is expected to earn at least (10%) (before income taxes). Which plants should be chosen, show this by using the (P.W.C) method. 5 60 Environmental 400 20 20 Smart 200 10 50

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Q1: A company is going to install a new asphalt plants. Three different type of plants
are available. The essential differences in first cost, salvage value and expenditures are
shown below.
Asphalt Plant types (proposals)
Investment cost (million IQD)
Useful life (year)
Annual disbursement(million
IQD)
Speedy
100
5
60
Environmental
400
20
20
Smart
200
10
50
10
50
20
Salvage value (millionIQD)
Each plants will produce the same quantity of asphalt. Any capital invested in this
company is expected to earn at least (10%) (before income taxes). Which plants should
be chosen, show this by using the (P.W.C) method.
Transcribed Image Text:Q1: A company is going to install a new asphalt plants. Three different type of plants are available. The essential differences in first cost, salvage value and expenditures are shown below. Asphalt Plant types (proposals) Investment cost (million IQD) Useful life (year) Annual disbursement(million IQD) Speedy 100 5 60 Environmental 400 20 20 Smart 200 10 50 10 50 20 Salvage value (millionIQD) Each plants will produce the same quantity of asphalt. Any capital invested in this company is expected to earn at least (10%) (before income taxes). Which plants should be chosen, show this by using the (P.W.C) method.
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