Solar and conventional alternatives are available for providing energy at a remote U.S. Am training site. The costs associated with each alternative are shown. Use the B/C method to determine which should be selected at an interest rate of 8% per year over a 10-year study period.

Solar and conventional alternatives are available for providing energy at a remote U.S. Am training site. The costs associated with each alternative are shown. Use the B/C method to determine which should be selected at an interest rate of 8% per year over a 10-year study period.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Suppose you are a panelist, and you must evaluate if the design is feasible or not. You look at the breakdown of expenses, possible revenues, etc. Here are some important chapters and discussions taken from a certain plant design. Chapter 3: Market Study This plant design, entitled “IIVSDROP: The First Ear Dropper Solution Manufacturing Plant in the Philippines” considers a 30-year period of study, starting 2021, after finishing its construction by 2020. All projections, and interest rates set by the company shall be evaluated within this 30-year period. The inflation rate shall not be included in the computation and a minimum attractive rate of return is set at 20%. Chapter 4: Products Our company produces ear dropper solution which can be sold for PHP. 125.00 per bottle. Annually, the company can produce 1000 pallets of the product. Each pallet is stacked with 14 layers and each layer consists of 8 boxes. A box contains 12 bottles of ear dropper for wholesale…
An engineering company is evaluating two different options for buying a triaxial testing machine. The expected cash flow for two different options and other required data are given in Table. By considering data given in Table, which option should be preferred by the engineering company. Give all calculation steps. First Cost (TL) Annual Operating COsts (TL) Annual Revenue (TL) Salvage Value (TL) Economic Life (TL) Option A 120000 14000 50000 30000 5 Option B 150000 10000 60000 350000 5 Interest Rate - 0.05 Discount Rate - 0.05
Equipment needed at a Valero Corporation refinery for the conversion of corn stock to ethanol, a cleaner burning gasoline additive, will cost $50,00 to be used for 4 years, with an annual operating cost (AOC) of $10,000, and a salvage value of $35,000 after 4 years. Determine the AW values for one and two life cycles at 15 % per year.
Compare the Annual Worth of the two systems and identify the better option at MARR = 10% per year: Solar: First cost $1,500,000; AOC $-700,000; Salvage value $100,000; Life of 8 years Geothermal: First cost $2,250,000; AOC $-600,000; Salvage value $50,000; Life of 8 years Select the Geothermal System with a calculated AW of $-1,017,368 Select the Geothermal System with a calculated AW of $-727,591 Select the Solar System with a calculated AW of $-1,238, Select the Solar System with a calculated AW of $-972,416
Two roadway design are under consideration. Design 1A will cost $3 million to build and $100,000 per year to maintain. Design 1B will cost $3.5 million to build and $40,000 per year to maintain. Both designs are assumed to be permanent. Use an AW based rate of return equation to determine (a) the breakeven ROR, and (b) which design is preferred at a MARR of 10% per year
A pipeline engineer working in Kuwait for the oil giant BP wants to perform a present worth analysis on alternative pipeline routings—the first predominately by land and the second primarily undersea. The undersea route is more expensive initially due to extra corrosion protection and installation costs, but cheaper security and maintenance reduces annual costs. Use Present Worth Analysis with a MARR = 10% to determine which route should be selected.
Salma is considering the two alternative printing machines. Specific data are as follows: Manufacturer Cost Useful Life End-of-Useful Life Salvage Value Canon OMR 100 8 years OMR 10 Toshiba OMR 130 10 years OMR 15 Assume the salvage value of Canon printer after 2 years is OMR 80. Salma uses an interest rate of 5% and wants to use the PW method to compare these alternatives over an analysis period of 10 years. Which printing machine should she choose?
A shelve manufacturer is developing a plan for the following two years. The question iswhether to lease a large workshop space with highproduction capacity or two workshop spaces with a smaller capacity. The initial cost to lease a large workshop space is equal tothe total cost of leasing two smaller ones. If the large workshop space is leased and customer demand is high, then NPV is $8,500,000 annually. If the large workshop is leased and customer demand is low, then NPV is$4,500,000. If two small workshops are leased and demand is low, the total NPV is $6,500,000 but if they experience high demand, the total NPV of two small offices will be $8,000,000.Some studies have been done on market dynamic and the market expert suggested that the likelihood of high demand is 0.7.Use the above information to determine which option returns the best NPV outcome in thetwo-year period.The rate of return is 0.1.
You are considering the following project. What is the NPV of the project? WACC of the project: 0.10 Revenue growth rate: 0.05 Tax rate: 0.40 Revenue for year 1: 13,000 Fixed costs for year 1: 3,000 variable costs (% of revenue): 0.30 project life: 3 years Economic life of equipment: 3 years Cost of equipment: 20,000 Salvage value of equipment: 4,000 Initial investment in net working capital: 2,000
Triple Play Innovators Corporation (TPIC) plans to offer IPTV (Internet Protocol TV) service to North American customers starting soon. Perform an AW analysis of the EVA series for the two alternative suppliers that bid for hardware and software contracts. Let Te = 30% and aftertax MARR = 8%; use SL depreciation (for simplicity) and a study period of 8 years. Use a spreadsheet, unless requested to perform hand calculations.
A company is planning to install a new automated plastic-moulding press. Four different presses are available. The initial capital investments and annual expenses for these four mutually exclusive alternatives are as follows: Assume that each press has the same output capacity and has no market value at the end of its useful life; the selected analysis period is five years. Which press should be chosen? Use MARR = 20% per year.
Using a required rate of return equal to 10 percent, compute the modified internal rate of return (MIRR) for a project that costs $80,000 and is expected to generate $33,000, $66,000, and -$10,950, respectively, during the next three years. Should the project be purchased? Do not round intermediate calculations. Round your answer to two decimal places. The project -Select- (should, should not) be purchase because the MIRR, that is %, is -Select- (greater than, lower than, equal to) the required rate of return.

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