Question 2 Part A:A new project is being considered. The initial cost of the project is $100,000. It is expected that revenues will be $23,000 annually. There will be annual operating expenses of $10,000.At the end of the 8-year life of the project, there is a salvage value of $20,000. Use a MARR of 5%. Perform a PW (present worth) analysis.Question 2 Part A: Choose the correct Cash Flow Diagram for this scenario from the following choices.Option A23,000100,000110,000Option B23,000081i=5%20,000Option C23,00001100,00010,000i = 5%100,00020,000Option D810100,00010,0008i=5%20,00023,00010,000i = 5%20,0008

A Cash Flow Diagram (CFD) is a graphical representation of cash inflows and outflows over a certain…

Answered: Question 2 Part A: A new project is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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am. 175.
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DRAW CASH FLOW DIAGRAM Calculate the capitalized cost of a project that has an initial cost of P8,000,000 and an additional cost of P250,000 at the end of every 8 years. The annual operating costs will be P150,000 at the end of every year for the first 5 years and P200,000 thereafter. In addition there is expected to be recurring major rework cost of P500,000 every 13 years. Assume i=12%
5. Solve the given question and give the correct answer.
Find the conventional payback period for the following project: First Cost $10,000 $500 in Year 1, increasing by $200/year $3,000/year $4,000 Maintenance Income Salvage Useful Life 10 years MARR 10%
Rubber: Initial investment: $132,000 Annual cost: $43,000 Annual revenue: $100,000 Salvage value: $11,000 Useful life: 10 years Using the cotermination assumptions, a study period of 6 years, and a MARR of 9%, what is the present worth of the rubber alternative? Assume that the rubber alternative's equipment has a market value of $17,000 at the end of Year 6. Typed numeric answer will be automatically saved.
Calculate the capitalized cost of a project that has an initial cost of P3500000 and an additional investment cost of P950000 at the end of every 8 years. The annual operating cost will be P120000 at the end of every year for the first 5 years and P150000 thereafter. In addition there is expected to be a replacement cost of P350000 every 12 years. The interest rate is 12%. Also show the cash flow diagram.
The following data applies for example problems 8.1 through 8.3. A company is considering the purchase of either machine A or machine B. machine A machine B initial cost $80,000 20 years $20,000 $18,000 per year $100,000 25 years $25,000 $15,000 per year for the first 15 years $20,000 per year for the next 10 years estimated life salvage value other costs The interest rate is 10%, and all cash flows may be treated as end-of-year cash flows. Assume that equivalent annual cost is the value of the constant annuity equal to the total cost of a project. The equivalent annual cost of machine B is most nearly (A) $21,000 (B) $21,500 (C) $23,000 (D) $26,500
A factory manager is considering the purchase of one of the following two production equipment. Cash flow estimates for equipment A are in year-zero dollars while those of equipment B are in actual dollars. Equipment A (year-zero $) Initial investment Net annual revenue $9,800 $3,000 Market value at end of useful life Useful life, years $0 12 Equipment B (actual $) $11,200 $4,000 $0 12 The manager uses a market interest rate of 12% per year. If inflation rate is expected to average 7.69% per year over the next several years, determine the PW of each equipment. 1. The PW of Equipment A is A. $18,355 B. $13,176 ○ C. $12,800 ○ D. $8,783 2. The PW of Equipment B is ○ A. $15,200 B. $26,340 ○ C. $13,577 OD. $19,435
11-8. The Ford Motor Company is considering three mutually exclusive electronic stability control systems for protection against rollover of its automobiles. The investment (study) period is four years, and MARR is 12% per year. Data for the fixture costs of the systems are as follows. Alternatives В Annual savings MV (after 4 years) Capital investment $12,000 $15,800 $8,000 $4,000 $5,200 $3,000 $3,500 $1,500 $3,000 IRR 19.2% 18% 23% Plot the AW of each alternative against MARR as the MARR varies across this range: 4%, 8%, 12%, 16%, and 20%. What can you generalize about the range of the MARR for which each alternative is preferred? (11.2)
An economic evaluation of the following mutually exclusive alternatives is being conducted. Since they have different service lives, repeatability is assumed and an analysis period of 18 years is used. The MARR is 10%. Initial cost Annual revenues Service life (years) Alternative A $30,000 $25,000 6 Alternative B $100,000 $40,000 9 Answer the following two questions: (1) The net AW of Alternative B over the analysis period is (select the closest value) A. $15,614 B. $27,807 C. $22,636 D. $57,364 (2) The net PW of Alternative B over the analysis period is (select the closest value) A. $228,056 B. $185,647 C. $130,361 D. $128,056
Use NPV and ERR analyses to determine which of the following two mutually exclusive projects is the best economic choice. Use MARR of 15%. Project A: -500 200 200 200 200 L= 500 Project B: -200 100 100 L= 200

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