Spring 2024 An energy efficiency project has a first costof $400,000, a life of 10 years, and no salvage value.Assume that the interest rate is 10%. The most likelyvalue for annual savings is $50,000. The optimisticvalue for annual savings is $80,000 with a probabilityof 0.2. The pessimistic value is $40,000 with aprobability of 0.25. a. What is the expected annualsavings and the expected PW? b. Compute the PW forthe pessimistic, most likely, and optimistic estimates ofthe annual savings. What is the expected PW?Spring 20241. An energy efficiency project has a first cost of $400,000, a life of 10 years, and no salvage value.Assume that the interest rate is 10%. The most likely value for annual savings is $50,000. Theoptimistic value for annual savings is $80,000 with a probability of 0.2. The pessimistic value is$40,000 with a probability of 0.25.What is the expected annual savings and the expected PW?b. Compute the PW for the pessimistic, most likely, and optimistic estimates of the annualsavings. What is the expected PW?

Part 2:Explanation:Step 1: Calculate the expected annual savings by taking the weighted average of…

Answered: Spring 2024 An energy efficiency…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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There is a 50% chance that consumer spending will increase next year. Our clothing business heavily depends on levels of consumer spending. The table below shows the profits for various alternatives. Increase Decrease 0.5 0.5 Purchase footprint 5 4 3 0 Short-term lease Expand e-commerce Keep all as is 0213 What should we do based on Maximax? Short-term lease Keep all as is Expand e-commerce Purchase footprint
SHOW IN EXCEL SHOW EACH PROCESS IN EXCEL Gasoline EV Purchase Cost $50,000 $80,000 Annual - Maintenance $5,000 $2,500 Annual Fuel $7,500 $3,000 Service Life Probability Service Life Probability 55% 52% 6 10% 65% 7 25% 7 10% 8 35 % 8 25% 9 20% 9 50 % 10 5 % 10 8% a) (5 Points) What is the expected value of the present worth and expected value of the standard deviation of each option? b) (5 Points) Which option should be chosen, and why? c) (5 Points) If the company' s MARR is 20%, which option would they choose and why? d) (5 Points) What value of the MARR makes the company indifferent between choosing gasoline or electric vehicles?
At expiration, if you have been diligently delta hedging,, the delta of an option will be: A. 100% if it's in the money and exercised or Zero if it expires out-of-the-money B. 100% if it expires out-of-the-money or zero if it's in the money and exercised C. It depends if you exercise it, sometimes even if an option is in the money at expiration you may chose not to exercise it because you did not cover the cost of your premium. D. You should not be delta hedging if you have a good idea of where ithe underlying is going
Please show work on Excel. A new engineer is evaluating whether to use a larger diameter pipe for a water line. The pipe will cost $327,089 more initially but will reduce pumping costs. The optimistic, most likely, and pessimistic projections for annual savings are $30,000, $20,000, and $5000, with respective probabilities of 20%, 50%, and 30%. The interest rate is most likely to be 7%, but is equally likely to be 6% or 8%, and the water line should have a life of 40 years. Find the expected annual savings and the expected interest rate. Determine the Expected PW based on these. Hint: Based on the different saving and their probabilities, find the expected value of savings. Then find the expected value of the interest rate (each option has equal probability). Then find the PW using these values.
1. Using the Standard Select Life Table at 5% per year interest, calculate the standard deviation of the present value of an annuity of $10000 per year payable annually in advance to a life aged 40.
1. Find the breakeven market value.2. Find the breakeven annual expense.3. Is the decision more sensitive to changes in market value or annual expense? How doyou know?
not use ai please
Eddie’s Precision Machine Shop is insured for $700,000. The present yearly insurance premium is $1.00 per $100 of coverage. A sprinkler system with an estimated life of 20 years and no salvage value can be installed for $20,000. Annual maintenance costs for the sprinkler system are $400. Ifthe sprinkler system is installed, the system must be included in the shop’svalue for insurance purposes but the insurance premium will reduce to $0.40 per $100 of coverage. Eddie uses a MARR of 15%/yr. Solve, a. What is the internal rate of return of this investment? b. What is the decision rule for judging the attractiveness of investments based on internal rate of return? c. Is the sprinkler system economically justified?
The annual profit from an investment is $20,000 each year for 5 years and the cost of investment is $80,000 with a salvage value of $50,000. The discount rate (cost of capital) at this risk level is 12%. Based on the given information, the net present value of the investment = $ 20,467 (round your response to the nearest whole number).
The city of St. John's is intalling a new swimming pool in the east end recreation centre. One design being considered is a reinforced concrete pool that will cost $5,400,000 to install. Thereafter, the inner surface of the pool will need to be refinished and painted every 5 years at a cost of $440,000 per refinishing. Assuming that the pool will have essentially an infinite life, what is the present worth of the costs associated with the pool design? The city uses a MARR of 10%. If the installation costs, refinishing costs, and MARR are subject to 5% or 10% increases or decreases, how is the present worth affected? (NOTE: Text answers are case sensitive and every field in this question is worth equal value) All calculations are performed using 4 significant figures. (a) Complete the table below: Sensitivity Analysis Calculated Values Parameter Construction Costs Refinishing Costs MARR [%] -10% -5% Base Case 5,400,000 440,000 10 +5% +10%
2. You have been asked to perform a sensitivity analysis on a plant modernization plan. The initial investment is $30,000. Expected annual savings is $13,000. Salvage value is $7,000 after a 7 year planning horizon. The MARR is 12% a. Determine the PW of this modernization. cion 4 2.b. -80% cion 5 2.c. -60% cion 6 2.d. -40% zion 7 2.e. -20% cion 8 2.f. +20% tion 9 2.g. +40% cion 10 2.h. Determine the percentage change in net annual savings that causes a reversal in the decision regarding the attractiveness of the project 10 10 00 00 10- 10 00
Engineering Econ HW8 Q1

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