Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 15P
a:
To determine
All the available combination with the budget c.
b:
To determine
Calculate the new present worth.
c:
To determine
Optimal section.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A firm has a capital budget of $30,000 and is considering three possible independent projects. Project A has a present outlay of $12,000 and yields $4,231 per annum for 5 years. Project B has a present outlay of $10,000 and yields $4,184 per annum for 5 years. Project C has a present outlay of $17,000 and yields $5,802 per annum for 10 years. Funds which are not allocated to one of the projects can be placed in a bank deposit.
Identify seven combinations of project investments and a bank deposits which exhaust the budget.
Which of the above combinations should the firm choose when the bank deposit rate is (i) 15% or (ii) 20%? Explain your answer and show your work.
Suppose there is no option to deposit in the bank, but the projects are "divisible" (e.g. you may have 25% of project A). Which combination should the firm choose? Explain your answer and show your work. Use 15% as the deposit rate (discount rate).
All of the following are factors that affect the effective MARR of a project, except: (a) Project risk (b) Product selling price (c) Availability of capital (d ) Attractiveness of other investment opportunities
Identify the following variables as either discrete or continuous: (a) The number of times heads comes up in 100 tosses of a coin (b) The number of accidents occurring in a specified section of a freeway (c) The weight of boxes shipped from an Amazon warehouse (d) The concentration of carbon dioxide in the air of San Diego versus time (e) Optimistic, most likely, and pessimistic estimates of salvage value
Chapter 15 Solutions
Contemporary Engineering Economics (6th Edition)
Knowledge Booster
Similar questions
- Eaton Medical Services is evaluating 10 independent indivisible projects, all with positive NPV. The company's capital budgeting for the year is limited to a maximum of $5,000,000. (A) Use solver to find the optimum combination of projects the company should accept, under the assumption that A and B are mutually exclusive and one of them has to be selected. (B) Ignore the constraint from previous part, assume that project “I” has to be accepted. Use solver to find optimum combination of projects the company should accept now. Please show all steps to compute in excel using solver to get to the right answers. Thank you in advance, will upvote! Project Cost NPV A 1,061,191 122,737 B 561,758 58,102 C 1,647,849 280,660 D 1,026,020 89,365 E 191,870 17,568 F 1,333,625 76,960 G 3,102,642 123,240 H 275,568 79,367 I 2,044,070 60,506 J 1,017,567 56,690arrow_forward1)what is the best project based on simple payback 2) What is the best project based on discounted payback 3)What is beta B/C ratio 4) What is gammas B/C ratioarrow_forwardWhich of the following might be considered by top management of an organization when setting a Minimum Attractive Rate of Return (MARR)? (a) The amount of money available for investment, and the source and cost of these funds (i.e., equity funds or borrowed funds) (b) The number of good projects available for investment and their purpose (i.e., whether they sustain present operations and are essential, or whether they expand on present operations and are elective) (c) The amount of perceived risk associated with investment opportunities available to the firm and the estimated cost of administering projects over short planning horizons rather than long planning horizons (d) The type of organization involved (i.e., government, public utility, or private industry) (e) All of the abovearrow_forward
- Cost-effectiveness analysis (CEA) differs from benefit/cost analysis (B/C) in that: (a) CEA cannot handle multiple alternatives (b) CEA compares alternatives on the basis of a specific outcome rather than solely on monetary units (c) CEA cannot handle independent alternatives (d) CEA is more time consuming and resource intensivearrow_forwardCould you please tell me answer to this question, a circled or highlighted answer would be appreciated, thank you.arrow_forwardAn engineering student has only 45 minutes before the final exam in her Engineering Economy class. She needs help in understanding cost-effectiveness analysis because she knows from the instructor’s review session that a CEA problem will be on the exam. There is time for using only one method of assistance before the exam; she must select well. In a rapid process of estimation, she determines how many minutes it would take for each method of assistance and how many points it might gain for her on the final. The method and estimates follow. Where should she seek help to be most effective? Assistance from Minutes for Assistance Points Gained Teaching assistant (TA) 15 20 Slides on web 20 10 Friend in class 10 5 Instructor 20 15arrow_forward
- A community public works project will cost $92,000 and will benefit five different individuals. Individual Individual Benefit ($) Individual Cost ($) 1 4,500 6,000 2 18,500 15,000 3 19,000 17,000 4 30,000 24,000 5 29,000 30,000 Does this project meet the Pareto efficiency improvement criterion? If possible, revise the cost shares to allow the project to meet the Pareto criterion and to pass a referendum. please use excel with formulasarrow_forwardIs it possible or even desirable for strategic planning for project management to include ways to improve cooperation and working relationships, or is this beyond the scope of strategic planning for project management?arrow_forwarda. Based on PW method, Design Z is more economical. b. The modified B/C ratio of Design Y is The modified B/C ration of Design Z is (Round to two decimal places) (Round to two decimal places) c. The incremental B/C ratio is (Round to two decimal places) Therefore, based on the B/C ratio method, Design Z is more economical d. The discounted payback period of Design Y is The discounted payback period of Design Z is years (Round to one decimal place) years (Round to one decimal place) Investment cost Annual revenue Annual cost Useful life Salvage value Net PW Therefore, based on the payback period method, Design y would be preferred. (e) Why could the recommendations based on the payback period method be different from the other two methods? ⒸA. because the payback period method ignores the cash flows after the payback period O B. because the payback period gives more weight to the cash flows after the payback period C Design Y Design Z $140,000 $275,000 $57,659 $96.354 $17.618 $31,687 15…arrow_forward
- Determine the number of acceptable mutually exclusive bundles for the four independent projects described below if the investment limit is $400,000 and the following project selection restriction applies: Project 1 can be selected only if projects 3 and 4 are selected. (a) <7 (b) 7 (c) 10 (d) 12 Initial Project Investment, $ 1 −100,000 2 −150,000 3 −75,000 4 −235,000arrow_forward! Required information An airport Baggage Handing Department has evaluated two proposals for baggage delivery conveyor systems. A present worth analysis at i = 15% per year of estimated revenues and costs resulted in PWA = $460,000 and PWB = $395,000. In addition to this economic measure, three more attributes were independently assigned a relative importance score from 0 to 100 by the department manager and a senior team supervisor. Importance Scores Manager 45 Attribute Economics Durability Safety Maintainability 35 30 20 Attribute Economics Durability Safety Maintainability Separately, you have used the four attributes to value rate the two proposals on a scale of 0 to 1.0 as shown in the following table. (The economic attribute was rated using the PW values.) Value Rating Proposal A 1.00 0.35 1.00 0.25 Importance Scores Supervisor 40 35 Select the better proposal using the following method. Weighted evaluation of the department manager's method. The value of R; for A is The value…arrow_forwardAssume a pool of 115 people in an insurance pool (a group of people insured through community rating). It is estimated that a small number in the pool will have significant pre- existing conditions as indicated in the table. Based on the age of these 115 people, the insurance company estimates the following distribution of health care claims (which includes necessary profit and administrative costs of the insurance company). Number of Insured Antidipated Heath Costs/Year/Person $1,400 $1,500 $1,600 $1,700 $1,800 $1,900 $2,000 $2,100 $2,200 $2.300 $2,400 $2,500 $2,700 $2,000 $2,900 $3,000 $3,100 $3.200 $3.300 $4,000 57,00 $10,000 Everyone joins the poal ad pays the necessary premum in the first year. The clams experience of the customers is faund to be generaly consstent with expeclations of the insurance company. A) What would be the premium In the third year if there is no inflation, based on the company's oxperience from the past year? B) If those customers who have anticipated…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education