Two investment projects are being evaluated based on their payback periods. The first alternative requires an initial investment of $520,000, has gross revenues of $85,000, annual O&M costs of $17,000 and aservice life of 23 years. What is the project's discounted payback period if the MARR is 10% per year?OA. 8.8 yearsOB. 19.1 yearsOC. 15.2 yearsOD. 9.9 yearsIf the second alternative has a payback period of 20 years, which alternative should be preferred based on the payback period?OA. The second alternativeOB. The first alternative

To solve this problem we will be using the EXCEL command NPER. All About the NPER Function in Excel…

Answered: Two investment projects are being…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The product development group of a high-tech electronics company developed five proposals for new products. The company wants to expand its product offerings, so it will undertake all projects that are economically attractive at the company’s MARR of 20% per year. The cash flows (in $1000 units) associated with each project are estimated. Which projects, if any, should the company accept on the basis of a present worth analysis? Project A B C D E Initial investment, $ −400 −510 −660 −820 −900 Operating cost, $/year −100 −140 −280 −315 −450 Revenue, $/year 360 235 400 605 790 Salvage value, $ — 22 — 80 95 Life, years 3 10 5 8 4
A new bridge is being planned. The construction cost of the bridge is $1.9M and annual opkeep is estimated to be $25K. Also, major maintenance work is anticipated every eight years at a cost of $350K per occurrence. The town governnent's MARR ia 99% per year. If the bridge has an expected life of 50 years, what is the capitalized worth (CW) of the bridge over a 100-year study period?
Beaver, a city in the United States, is attempting to attract a professional soccer team. Beaver is planning to build a new stadium that will cost $240 million. The annual upkeep is expected to amount to $830,000. The turf will have to be replaced every 9 years at a cost of $860,000. Painting every 8 years will cost $88,000. If the city expects to maintain the facility indefinitely, what is the estimated capitalized cost at i = 9% per year? The estimated capitalized cost is $
A company purchases manufacturing equipment for $ 3,950,000. The company produces 1,800 units of production per year. The revenue associated with each production unit is $ 1,310. The total annual costs per production unit is $ 630. a) What is the non-discounted payback period? b) What is the payback period if MARR = 20.00% Answer to part b) can be within a 1 year range.
Answer part A Answer part B
A $45,000 investment in a new conveyor system is projected to improve throughput and increasing revenue by $14,000 per year for five years The conveyor will have an estimated market value of $4,000 at the end of five years. Using an MARR = 12% per year, what is the FW? $-19,329.40 $13,635.70 $16,998.90 none of the above W ?
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What is the payback period for a project with the following characteristics, given a minimum attractive rate of return (MARR) of 12%? First Cost $20,000 Annual Benefits $8,000 Annual Maintenance $2,000 in year 1, then increases by $500 per year Salvage value $2,000 Useful Life 10 years
Avian Air Cargo is considering an investment of $10,000,000 with life expectancy of 10 years and annual operating cost of $400,000 in Year 1 with an $50,000 per year starting in Year 2 through the life of the project. Avian Air Cargo anticipates a revenue stream of $2,500,000 per year for 20 years I 12%, what is the rate of return for this project and is it economically justified? It is NOT economically justified because the rate of return is between 14% and 15%. It IS economically justified because the rate of return is between 10% and 11%. It is NOT economically justified because the rate of return is between 10% and 11%. It IS economically justified because the rate of return is between 14% and 15% of MARR
A $45,000 investment in a new conveyor system is projected to improve throughput and increasing revenue by $14,000 per year for five years The conveyor will have an estimated market value of $4,000 at the end of five years. Using an MARR = 12% per year, what is the FW? $-19,329.40 $13,635.70 $16,998.90 none of the above K ?
Two investment projects are being evaluated based on their payback periods. The first alternative requires an initial investment of $760,000, has gross revenues of $118,000, annual O &M costs of $23,000 and a service life of 20 years. What is the project's discounted payback period if the MARR is 8% per year? OA. 8.3 years OB. 13.3 years O C. 16.7 years OD. 9.4 years If the second alternative has a payback period of 8 years, which alternative should be preferred based on the payback period? OA. The first alternative OB. The second alternative
An aerodynamic three-wheeled automobile (the Dart) runs on compressed natural gas stored in two cylinders in the rear of the vehicle. The $15,000 Dart can cruise at speeds up to 85 miles per hour, and it can travel 95 miles per gallon of fuel. Another two-seater automobile costs $11,000 and averages 45 miles per gallon of compressed natural gas. If fuel costs $8.00 per gallon and MARR is 12% per year, over what range of annual miles driven is the Dart more economical? Assume a useful life of six years for both cars. Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year. Dart is more economical if you are planning on driving miles or more per year. (Round to the nearest whole number.)

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