Question 4Concrete incorporated owns a concrete block factory and is considering adding a new productionline which costs $200,000 (including the installation costs) and has a useful life of 15 years, theline has a salvage value of $40,000. Concrete incorporated estimates that this expansion wouldlead to an increase in revenues of $44,000 starting at the end of first year and decreasing at rateof 2% per year due to decrease in the machine's productive capacity while the O & M would cost$10,000 per year increasing at rate of 5% per year. Assume that the production line would beinstalled and functional on the purchase day and the company's MARR is 12%, should thecompany undertake this expansion? And why?Hint: use geometric gradient formula1-1+g" * 1+i-where i+gP= A*i-gNP= A wherei=g1+i

Answered: Question 4 Concrete incorporated owns a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The consultancy Imagination Inc. is working with its manufacturing client Parts-R-Us to improve their on-time performance. The firm can earn a bonus of up to $1,000,000 based on how much the on-time performance actually improves. It's current (baseline) on-time performance is 90%. The company typically completes approximately 1,000 orders per month, with approximately 100 orders delayed. The bonus payment is prorated according to the following criteria: · The on-time performance improvement is calculated based on a reduction in late events or an improvement in on-time performance. · No bonus is earned for the first 25% reduction in late events, say from 100 to 75. Maximum bonus is earned once Parts-R-Us achieves 95% on-time performance. Please answer the following: Write down a formula to determine the total bonus amount to be received Using your formula, show how much bonus would be paid if Parts-R-Us achieves 94% on-time performance.
Describe the process of determining the equivalent annual worth of the project and the unit profit per production?
Mary, a project manager for ABC Ic., is reviewing a product quality improvement project. She has determined that the project's Annual Worth of $3,396. for a period of 8 years. She now has to calculate the IRR for the project but unfortunately she has lost some information about the cash flows. She knows only that the project has: a 8-year project life with an initial cost of $400,000. a set of equal revenue cash flows occurred at the end of each year for 8 years, and • MARR used for calculation the Annual Worth was 8%. Find the annual revenue first and then calculate the IRR for the project = ? O 14% < IRR (i*) < 15% O 13% < IRR (i*) < 14% O 10% < IRR (i*) < 11% O 9% < IRR (i*) < 10% O 8% < IRR (i*) < 9%
A steam generation system at a biomass-fueled power plant uses an electrostaticprecipitator (ESP) to clean its gaseous effluents. The power plant has consistently made use ofthe same type of ESP over the past several years. The installed cost of a new ESP has beenrelatively constant at $100,000. Records of operation and maintenance expenses indicate thefollowing average expenses per year as a function of the age of the ESP. The MVs of the ESP arealso reasonably well known as a function of age. Data graph in image attached. Determine the best time to replace the ESP if the MARR is 15% per year.
An integrated, combined cycle power plant produces 280 MW of electricity by gasifying coal. The capital investment for the plant is $690 million, spread evenly over two years. The operating life of the plant is expected to be 17 years. Additionally, the plant will operate at full capacity 78% of the time (downtime is 22% of any given year). The MARR is 5% per year. a. If this plant will make a profit of three cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low-risk venture? b. What is the IRR for the plant? Is it profitable? O
Ans is $ 7.322 please correct me
B) Calculate the AEC (Average Equivalent Cost) of the hospital building using the cost requirements given in Table 3 ) Table 3 Construction Cost OMR 1 million OMR 150,000 Annual Running Cost OMR 30,000 Repainting Costs @ every 2 Years Repair Costs @every 2 years OMR 25,000 Major replacement cost @ 5 years OMR 75,000 (Including the service costs) The demolition cost is estimated at OMR 200,000 (excluding the Salvaged material valued at OMR 60,000) at the end of 15th year. The interest rate (r) is 5% and the Annual Sinking Fund (ASF) is 1.5%. Note: The PV and SF tables is provided as attachment to this question paper.
H3
2.55 HGT Oil expects receipts from a fracked well to decline according to an arithmetic gradient of $50,000 per year. If this year's receipts are ex- pected to be $280,000 (i.e., end of year 1) and the company expects the useful life of the well to be 5 years, (a) what is the amount of the cash flow in year 3, and (b) what is the equivalent uniform an- nual worth in years 1 through 5 of the income from the well at an interest rate of 12% per year? 56. For the cash flow rewve nues shown hal Si
An engineer analyzing cost data about hydrogen sulfide monitors discovered that the information for the first three years was missing. However, he knew the cost in year 4 was $1250 and that it increased by 5% each year thereafter. If the same trend applied to the first three years, the cost in year 1 was:a. $1312.50b. $1190.48c. $1028.38d. $1079.80
3) Find the rate of return (IRR-Ch16.3) on a project that will cost $100,000 today and $400,000 in 3 years from today, BUT will return $50,000 at the end of every year for 11 years (4)
Problem 03.043- Shifted gradients A software company that installs systems for inventory control using RFID technology spent $680,000 per year for the past 3 years in developing their latest product. The company optimistically hopes to recover its investment in 5 years on a single contract beginning immediately (year 0). The company is negotiating a contract that will pay $255,000 now and a to-be-agreed-upon annual increase of a constant amount each year through year 5. How much must the income increase (an arithmetic gradient) each year if the company wants to realize a return of 15 00% per year? (Round the final answer to three decimal places)

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