Question(4): A power plant is being considered in the dead sea location. For an initial investment of $130 million, annual net revenues are estimated to be $15 million in years 1-5 and $20 million in years 6-20. Assume no residual market value for the plant. a. What is the simple payback period for the plant?

Question(4): A power plant is being considered in the dead sea location. For an initial investment of $130 million, annual net revenues are estimated to be $15 million in years 1-5 and $20 million in years 6-20. Assume no residual market value for the plant. a. What is the simple payback period for the plant?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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# 3 QUESTION 10 Suppose the MARR is 5%. Use the following table to answer the question-Which option should be selected as the base alternative? Initial Investment Annual Revenue Useful Life (Years) E D $ 4 R CMS A. Neither option is acceptable as a base alternative. OB. Both options are acceptable base alternatives. OC. FMS OD. I'm completely lost! E. CMS F Click Save and Submit to save and submit. Click Save All Answers to save all answers. 888 74 $31,000 $38,000 6,866 % FMS 5 T 9,201 G 6 MacBook FO H & 7 F7 U +00 8 J 9 K Save All Answers P 7.
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1.) Clinix is considering four independent projects. Given: All the projects will be economically viable for only 10 years; Company’s MARR = 12% per year Find: Which project should be selected based on a present worth analysis. *Note* Financial values are in $1,000 units. Project A Project B Project C Project D First Cost ($) -2,700 -1,400 -10,000 -9,500 Annual Net Profit ($/year) 800 1,200 2,400 3,200 Salvage Value ($) 25 30 45 60
mic) Liberty Airways is considering an investment of $830,000 in ticket purchasing kiosks at selected airports. The kiosks (hardware and software) have an expected life of four years. Extra ticket sales are expected to be 57,000 per year at a discount price of $35 per ticket. Fixed costs, excluding depreciation of the equipment, are $440,000 per year, and variable costs are $26 per ticket. The kiosks will be depreciated over four years, using the SL method with a zero salvage value. The onetime commitment of working capital is expected to be 1/8 of annual sales dollars. The after-tax MARR is 12% per year, and the company pays income tax at the rate of 21%. What's the after-tax PW of this proposed investment? Should the investment be made? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year. The after-tax PW of this proposed investment is $ The investment be made. thousand (Round to the nearest whole number.)
1. Consider two mutually exclusive investment projects: A 1 and A2. Each project has the same service life, and the present worth of each component value (B, I, and C') is computed at 10% as follows: Project Al: B=$8000, I-$3500, C-$2000 and Project A2: B=$18000, I- $11,000, C'-$4000 Which project would be the best alternative based on PI index?
The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Relevant ordering costs per purchase order $510 Relevant carrying costs per year for each product: Required annual return on investment 15% Required other costs per year $7 Annual demand is 30,000 products per year. The purchase price per product is $50. What is the annual relevant carrying costs?
Question 3.4 (15pts) Consider the following two mutually exclusive projects: a What assumption(s) do you need in order to compare a set of mutually exclusive service projects with unequal service lives? b With the assumption(s) defined in part (a) and using 10%, determine which project should be selected. c If your analysis period (study period) is just 4 years, what would be the salvage value of project 42 at the end of year 4 to make the two alternatives economically indifferent? Question 3.4 (15pts) Consider the following two mutually exclusive projects: Year A1 0 -$1,800 A2 -$3,600 1 -$500 -$ 600 2 -$500 - $600 3 -$500 - $600 4 -$500 - $600 5 $ 500+400 - $600 6 - $600 - $600 $600+1000 7 8 a What assumption(s) do you need in order to compare a set of mutually exclusive service projects with unequal service lives? b With the assumption(s) defined in part (a) and using 10 %, determine which project should be selected. c If your analysis period (study period) is just 4 years, what…
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Three investments are being studied by Bright Star Construction Limited. The table below provides the estimated cash flow for each of the three investments over the next five years. Due to budget constraints, Bright Star can only select one investment out of the three investments. At a MARR (Minimum Acceptable Rate of Return) of 12%, answer the following. Investment 1 2 3 a) b) Initial Cost $9,000,000 $5,000,000 $7,000,000 Expenses per Year $3,000,000 $1,500,000 $2,000,000 Return at end of year 5 $38,000,000 $20,000,000 $29,000,000 Use a rate of return method to determine the economically best investment for Bright Star. Are you expecting different results if the comparison is based on Annual Worth? (Hint: no calculations are needed). c) What are the case(s) in which a rate of return method is recommended? d) Is it always necessary for the alternative with the highest rate of return to be the best alternative?
Answer is -$3, 085,828 ( please show your work)
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
With interest at 10%, what is the benefit-cost ratio for this government project? $208,355 Initial Cost Additional costs at the end of year 1 and year 2 Benefits at end of year 1 and year 2 Annual benefits at end of year 3 through year 10 $23,720/year $0/year $91,825/year Enter your answer as follow: 12.34