The city of Valley View, California, is considering various proposals regarding the disposal of used tires. All proposals involve shredding, but the benefits differ in each plan. An incremental B/C analysis was initiated, but the engineer conducting the study left recently. PW of the AB/C Ratio when Compared with Alternatives Alternatives B/C Ratio Cost, $Millions Q 10 1.1 2.83 Q 40 2.4 2.83 R 50 1.4 80 1.8 Fill in the blanks in the incremental B/C columns of the table. Use a 20-year study period and an interest rate of 8% per year. AB/C Ratio when Compared with Alternative Alternative PW of the Cost, $ Millions B/C Ratio Q R 10 1.1 Q 40 2.4 50 1.4 80 1.8

The city of Valley View, California, is considering various proposals regarding the disposal of used tires. All proposals involve shredding, but the benefits differ in each plan. An incremental B/C analysis was initiated, but the engineer conducting the study left recently. PW of the AB/C Ratio when Compared with Alternatives Alternatives B/C Ratio Cost, $Millions Q 10 1.1 2.83 Q 40 2.4 2.83 R 50 1.4 80 1.8 Fill in the blanks in the incremental B/C columns of the table. Use a 20-year study period and an interest rate of 8% per year. AB/C Ratio when Compared with Alternative Alternative PW of the Cost, $ Millions B/C Ratio Q R 10 1.1 Q 40 2.4 50 1.4 80 1.8

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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The table below shows the various levels of a city's pollution cleanup along with the marginal benefit and marginal cost. Pollution Cleanup Marginal Benefit (dollars) $500 400 300 200 100 Quantity of Pollution Cleanup (units) 25 50 100 150 200 Marginal Cost (dollars) $100 200 300 400 500 Instructions: Enter your answers as a whole number. a. Suppose the city decides to undertake a cleanup level of 25 units. The marginal benefit of cleaning up the 25th unit is $ The marginal cost of cleaning up the 25th unit is $ Since the marginal benefit is [(Click select) the marginal cost, the city should clean up (Click to select) b. Suppose the city decides to undertake a cleanup level of 200 units. The marginal benefit of cleaning up the 200th unit is $ The marginal cost of cleaning up the 200th unit is $ Since the marginal benefit is (Click to select) c. The optimal level of pollution cleanup is the marginal cost, the city should clean up units. (Click to select) pollution. pollution.
Consider VM * D' * s recent investment in the 3D MRI equipment. While this technology allows the Medical Imagining Center to stay at the forefront of technological developments in the field, it is currently underutilized. How would you propose to treat the new equipment from a costing system standpoint? Let's assume that the operating data of the new 3D MRI machine is the following: Initial Cost = $5, 000, 000 Useful life = 10 years Residual value = 0 Overhead costs (other than depreciation) per year =\$ 250000 Capacity = 2,500 hours / year Current utilization = 500 hours / year
Use AW analysis. Texas Popcorn Corporation is planning to fully automate it process. The company CEO is currently looking into three options. Options A costs $450,000, AOC of $55,000, and salvage value of $85,000 after 3 years. Option B will cost $720,000 with an AOC of $68,000 and salvage of $95,000 after 4 years. Option C cost $800,000 with an AOC of $95,000 and salvage of $125,000 after 6 years. Which machine should the company select at an interest rate of 10% per year? Assume the project service life is 12 years. Use AW analysis to solve.
Two landfill construction plans are being considered by a planning committee. They are: 1) Plan A: Landfill with a groundwater protection system. 2) Plan B: Landfill constructed with a geosynthetic liner to minimize leachates from the landfill and protect groundwater sources. Annual amortized capital costs and risks of failure for the systems are presented in the table below: Amortized (yearly) cost Estimated Annual Risk of failure [$] Plan [%] Plan A 400,000 1.50 Plan B 550,000 0.015 The cleanup cost, if the groundwater system should fail, is estimated to be $8,000,000. a) Determine the annual social cost of failure of each of the two plans. 1200 b) Determine to total cost per year for the two plans. c) If minimum total annual cost is the criterion for selecting a option, what plan should be chosen? Clearly justify your choice.
The School District is considering the purchase of two school buses. At present, school children are transported to and from the schools in the area using private bus drivers. The new school buses will cost US$54,530 and will have a useful life of 11 years. They will have negligible scrap value, which can be ignored. The new school buses would be more cost-effective, resulting in labor savings of $10,000 per year. What are the Factor of the Internal Rate of Return, and the discount factor (%) that will give a Net Present Value of 0?
I also have some confuse for the decision: system B is more beneficial then system A due to lower negative NPV from system A. Should we need compare with negative NPV or cost per year? For negative NPV, system A ($541,843)is lower negative NPV than system B($706,984.82). On the other hand, system B ($167,116.14) is lower cost of each year than system A ($174,652.85). Thank you ~
Problem 07.007 - Conventional B/C ratio for road improvement project The cost of grading and spreading gravel on a curvy rural road is expected to be $300,000. The road will have to be maintained at a cost of $34,000 per year. Even though the new road is not very smooth, it allows access to an area that previously could only be reached with off-road vehicles. The improved accessibility has led to a 144% increase in the property values along the road. If the previous market value of the property was $900,000, calculate the conventional B/C ratio using an interest rate of 6% per year and a 20-year study period. The conventional B/C ratio is
Whispering Winds Company manufactures automobile components for the worldwide market. The company has three large production facilities in Virginia, New Jersey, and California, which have been operating for many years. Brett Harker, vice president of production, believes it is time to upgrade operations by implementing computer-integrated manufacturing (CIM) at one of the plants. Brett has asked corporate controller Connie Carson to gather information about the costs and benefits of implementing CIM. Carson has gathered the following data: Initial equipment cost $ 6,174,000 Working capital required at start-up $ 600,000 Salvage value of existing equipment 76,350 Annual operating cost savings 855,120 Salvage value of new equipment at end of its useful life 203,600 Working capital released at end of its useful life 600,000 Useful life of equipment 10 years Whispering Winds Company uses a 12% discount rate. Click here to view the factor table $ $ $ $
(Ignore income taxes in this problem.) Your Company has a telephone system that is in poor condition. The system must be either overhauled or replaced with a new system. The following data have been gathered concerning these two alternatives: Present System Proposed New System Purchase cost when new $100,000 $110,000 Accumulated depreciation, 90,000 Overhaul cost needed now 80,000 Working capital required 50,000 Annual cash operating costs 30,000 20,000 Salvage value now of old system 10,000 Salvage value in 8 years 2,000 15,000 Your Company uses a 12% discount rate and the total cost approach to capital budgeting analysis. Both alternatives are expected to have a useful life of eight years. What is the net present value of the new system alternative? Enter your answer without dollar signs. If the NPV is negative enter with a minus sign in front.
Attached is questions diagram, USE EXCEL AS ITS REQUIRED Question 10. Using the replacement chain method (machine B can be replaced with an identical machine at the end of year 3), determine which project should be adopted after tax. Pick the correct answer. Machine A Machine B Either machine Neither machine
Wildhorse's Auto Care is considering the purchase of a new tow truck. The garage doesn't currently have a tow truck, and the $59,950 price tag for a new truck would represent a major expenditure. Wildhorse Austen, owner of the garage, has compiled the following estimates in trying to determine whether the tow truck should be purchased. Initial cost $59,950 Estimated useful life 8 years Net annual cash flows from towing $7,990 Overhaul costs (end of year 4) $5,970 Salvage value $12,000 Show Transcribed Text د Wildhorse's good friend, Rick Ryan, stopped by. He is trying to convince Wildhorse that the tow truck will have other benefits that Wildhorse hasn't even considered. First, he says, cars that need towing need to be fixed. Thus, when Wildhorse tows them to her facility, her repair revenues will increase. Second, he notes that the tow truck could have a plow mounted on it, thus saving Wildhorse the cost of plowing her parking lot. (Rick will give her a used plow blade for free if…
A new storm drainage system must be constructed right away to reduce periodic flooding that occurs in a city that is in a valley. Five mutually exclusive designs have been proposed, and their present worth (in thousands of dollars) of costs and benefits are the following. Solve, a. Which system has the greatest B–C ratio? b. Which system has the largest incremental B–C ratio(based on differences between alternatives)? c. Which system should be chosen ?

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