Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 7, Problem 53P
To determine

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Anne made an investment of P8,000,000.00 and earns a yearly gross income of P5,000,000.00. The projected annual costs for his operation are as follows: labor costs of P1,000,000.00; material costs of P1,500,000.00; and opportunity costs of P1,200,000.00. If his company has a 20% Rate of Return goal, decide if this project is in line with Anne's objective or not.
Hollygan Co. must choose between gas-powered and an electric-powered forklift truck for moving materials in its factory. Because both forklifts perform the same function, the firm will choose only one.  (They are mutually exclusive investments.)  The electric-powered truck will cost more, but it will be less expensive to operate; it will cost $110,000, whereas the gas powered truck will cost $40,000.  The required rate of return that applies to both investments is 14 percent.  The life for both types of truck is estimated be 12 years, during which time the net cash flows for the electric-powered truck will be $23,500 per year and those for gas-powered truck will be $10,000 per year.  Calculate the NPV and IRR for each type of truck, and decide which to recommend. (Written work shown please)
Electric posts and transmission lines must be installed in a new industrial park. It has been estimated that 23 km of transmission lines will be needed and each kilometer of line costs P14,000.00 including the installation. In addition a pole must be placed every 100 meters on the average to support the lines, and the cost of the pole and its installation is P2,100.00 including labor. What is the cost of the entire project?

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Contemporary Engineering Economics (6th Edition)

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