The Water Regulatory Agency is considering five mutually exclusive alternativesfor providing a sewage-treatment facility. The annual equivalent costs andestimated benefits of the alternatives are as follows:AlternativeABCDEAnnual EquivalentYour answerCostPhp 53,000,00044,500,00061,000,00068,250,00049,990,000BenefitsPhp 55,300,00041,000,00069,850,00075,000,00056,990,0003. Using the problem above, which plan, if any, should be adopted if theWater Regulatory Agency wishes to invest if, and only if, the B-C ratio isat least 1.0? Use AW

Benefit to cost ratio is calculated by the following formula :- B-C ratio = Annual Benefit ÷ Annual…

The Water Regulatory Agency is considering five mutually exclusive alternatives for providing a sewage-treatment facility. The annual equivalent costs and estimated benefits of the alternatives are as follows: Alternative A B C D E Annual Equivalent Cost Php 53,000,000 44,500,000 61,000,000 68,250,000 49,990,000 Benefits Php 55,300,000 41,000,000 69,850,000 75,000,000 56,990,000 3. Using the problem above, which plan, if any, should be adopted if the Water Regulatory Agency wishes to invest if, and only if, the B-C ratio is at least 1.0? Use AW

The Water Regulatory Agency is considering five mutually exclusive alternatives for providing a sewage-treatment facility. The annual equivalent costs and estimated benefits of the alternatives are as follows: Alternative A B C D E Annual Equivalent Cost Php 53,000,000 44,500,000 61,000,000 68,250,000 49,990,000 Benefits Php 55,300,000 41,000,000 69,850,000 75,000,000 56,990,000 3. Using the problem above, which plan, if any, should be adopted if the Water Regulatory Agency wishes to invest if, and only if, the B-C ratio is at least 1.0? Use AW

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

See similar textbooks

Similar questions

Given the following pertinent data for four alternatives, what is the best alternative using the incremental ROR method given MARR=10% Initial Cost Annual CF, $ Life, years 30 O Alt. A Alt. B O Alt. C A O Alt. D B +22,000 +35,000 с -200,000 -275,000 -190,000 -331,350 30 D +19500 +42,000 30 30
:[A] { > Incremental analysis ([ B Alternative], [B wins ]): C A company considering 2 different machines at MARR at 12% Both life spans = 10 years Initial Cost Annual Operating lost Benefits per yin ar Salvage Value \table MM If you are and of frying investment to company decide More than 2 alternatives if the additional increment is worth while, compare Alternative: A Incremental analysis (Alternative) pairs then B C A MARR Company at Considering 2 different machines at 12% Both life spans = 10 years. M/C X м/с у Initial Cost 160000 285000 Annual Operating Cost Benefits per year Salvage Value 45 000 90000 45000 105000 20000 40000
Alternatives B and C are replaced at the end of their useful lives with identical replacements. Find the best alternative using MARR = 10%. Data Initial Cost Uniform Annual Benefit Useful Life a) Benefit to Cost ratio analysis b) Payback Period Analysis Alt. A $6,00 $150 20 Alt. B $900 $300 5 Alt. C $1,800 $450 10
The cash flows for three mutually exclusive alternatives are given in table below. MARR = 4%. ALB Alt. C 27,000 24,000 7,600 6,500 13% 11% Initial cost Annual benefits ROR Life in years Alt. A $15,000 $4,500 15% 5 Reference: Case Study 8 The best alternative for a MARR of 2.0% using the incremental rate of return analysis is A. Alt. C B. Alt. B C. Alt. A OD.Do-nothing
On the extra investment of the Mutually exclusive Independent Specified study period Do nothing alternative 5. higher initial cost alternative Future worth Every other alternative Incremental ROR Over one life cycle of each alternative Leest common 10 multiple of their analysis lives Motch eoch of the options above to the items below. When only one alternative is to be selected from multiple alternatives, the alternatives are said to be In evaluating multiple independent alternatives, each elternative is compared against the. In evaluating mutually exclusive alternatives on the basis of rate of return, it is necessary to conduct a (an). obtain the same ranking as the PW and AW methods. in order to A tabulation of incremental cash flow between two different-life alternatives must be prepared over the The rate of return calculated from an incremental analysis represents the rate of return obtainable
What is the best alternative using incremental Analysis? Use MARR = 15% A B C Capital Investment $ 2,000 7,000 4,200 Annual Revenues 3,200 8,000 6,000 Аппиal Costs 2, 100 5, 100 4,000 Market Value at the end of useful life 100 600 420 Useful Life (in years) 10 10 10 The correct ranking of Alternative is Blank 1 Select Alternative Blank 2 Note: Do not put comma, unit of measure and limit your answer to two decimal places. Ex: A-B-C
The following data is available for three different alternatives. Assume an interest rate of 10% per year, compounded annually. Initial Cost Annual Benefit Useful Life (yrs) Alternative A 10,000 1,450 infinite OO Alternative B 11,000 1,930 10 Alternatives B and C are replaced at the end of their useful lives with identical replacements. Using present worth analysis, find the best alternative. Choose Alternative A because its net present worth is postive Choose Alternative A because it lasts the longest Alternative 20,000 6,707 5 Choose Alternative C because its net present worth is $9,807.17 more than its nearest competitor Choose Alterntive C because it has the highest annual benefit
The five mutually exclusive alternatives shown below are under consideration for improving visitor safety and access to additional areas of a national park. If all alternatives are considered to last indefinitely, determine which should be selected on the basis of a rate of return analysis using an interest rate of 10%. A B C D E_ First cost, $ millions -20 -40 -35 -90 -70 Annual M&O cost, $ millions -2 -1.5 -1.9 -1.1 -1.3 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
A project is being planned that has an initial investment at time 0, annual revenuesand expenses, and a salvage value at the end of the project lifespan (20 years). The financialvalues are summarized below:Initial investment amount at time 0 $150,000Estimated annual revenue $34,500 per yearEstimated annual expenses $8,700 per yearEstimated salvage value at end of lifespan $10,000Minimum attractive rate of return (MARR) 15%a. Calculate the capital recovery amount CR(i%).b. Using the annual worth (AW) method, determine whether purchasing the equipmentis economically justified.c. Repeat part (a) using the internal rate of return (IRR) method based on annual worth(AW).d. Using the present worth (PW) method, determine the break-even time period afterwhich purchase of the equipment generates a profit. (Find N when PW = 0) year period.
O b. 3425 O c. 2369 O d. 3825 Clear my choice Alternative X has a first cost of 33000 an annuàl operating cost of 6300 , and a'salvage value of 9525 after 2 year. Alternative Y has a first cost of 34000 an annual operating cost of 6400, and a salvage value of 13400 after 2 year. If MARR of 2% per year, approximately what is the PW of each alternative? Select one: O a. PW of X= -36438 and PW of Y= -33881 O b. PW of X= -36802 and PW of Y= -34220 O c. PW of X= -36077 and PW of Y= -33546 O d. PW of X= -37170 and PW of Y= -34562 Next pa US ACTIVITY 2:23 AM Ca ENG 4/21/202 hp
The Gigadigit Manufacturing Inc. is considering to produce a new product. The following data have been provided to management: Sales price S17.50/unit Equipment cost S250,000 Incremental overhead cost |550,000/year Sales and marketing cost $150,000/year Operating and maintenance cost $25/operating hour Production time/1,000 units 100 hours Packaging and shipping cost s0.50/unit Planning horizon Minimum attractive rate of return 15% 5 years The managers would like to know the viability of this product and how it would roll out in sales. (a) To give them basis and insight what is the break-even value of units that must be sold annually to keep the product viable? (b) If the target revenue is from 30,000 units sold, what is the expected profit? (C) If the profit drops by 13% due to equipment replacement, how much must have been the cost of the alternative equipment? (d) Provide graph for (a)
Evaluate the two alternatives A and B and decide the economic justified alternative using: Present worth method Annual worth method Future worth method I.R.R method E.R.R Method E.R.R.R method M.A.R.R = 15% the details of alternatives are shown in the table below Alternatives A Investments $6,000 $7,500 Useful life (years) 10 Annual disbursements $2,500 $3,500 Annual revenues $4,500 $6,000 Salvage values $500 $1,000