4) Based on estimates the data for 2 types of bridges with different lives are as follows. If the minimum attractive rate of return is 10%, determine which project is more desirable using Annual Cost Method and ROR. Timber Bridge Steel Bridge First Cost P500k P850k Salvage Value 20k 100k Life in yrs 15 20 Annual maintenance 75k 50k

4) Based on estimates the data for 2 types of bridges with different lives are as follows. If the minimum attractive rate of return is 10%, determine which project is more desirable using Annual Cost Method and ROR. Timber Bridge Steel Bridge First Cost P500k P850k Salvage Value 20k 100k Life in yrs 15 20 Annual maintenance 75k 50k

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

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BASED ON ESTIMATES THE DATA FOR TWO TYPES OF BRIDGES WITH DIFFERENT LIVES ARE AS FOLLOWS. IFTHE MINIMUM RATE OF RETURN IS 9%, DETERMINE W/C PROJECT IS MORE DESIRABLE. TIMBER BRIDGE STEEL BRIDGEFIRST COST P 50,000.00 P 140,000.00SALVAGE VALUE 2,000.00 10,000.00LIFE IN YEARS 12 36ANNUAL MAINTENANCE 6,000.00 2,500.00EVALUATE USING:A.) THE ANNUAL COST METHODB.) PRESENT WORTH COST METHODC.) RATE OF RETURN METHOD
Chambers Company has just gathered estimates forconducting a break-even analysis for a new product.Variable costs are $7 a unit. The additional plant willcost $48,000. The new product will be charged $18,000a year for its share of general overhead. Advertisingexpenditures will be $80,000, and $55,000 will be spenton distribution. If the product sells for $12, what is thebreak even point in units? What is the break even pointin dollar sales volume?
4. Using the incremental B / C analysis (∆B/C). Determine the best alternative.5. Using the incremental rate of return (∆RoR) analysis. Determine the best alternative. MARR =10%. A B C DFirst cost 45,000 $25,000 $35,000 $15,000O &M Cost/year $4,000 $1,500 $3,000 $2,000Benefit/year $15,000 $9,500 $14,000 $8,000Salvage value $9,000 $5,000 $7,000 $3,000Life in years 10
Given EVM data, estimate the cost at completion of a project using the method "EAC based on combined cost and schedule performance." BCWS = $82.2M BCWP = $70.5M ACWP = $95.5M BAC = $105.5M A) $130M B) $150M C) $160M D) $170M
1. The Present Worth Method A project your firm is considering for implementation has these estimated costs and revenues: an investment cost of $50,000; maintenance costs that start at $5,000 at the end of year (EOY) 1 and increase by $1,000 for each of the next 4 years, and then remain constant for the following 5 years; savings of $20,000 per year (EOY 1–10); and finally a resale value of $35,000 at the EOY 10. If the project has a 10-year life and the firm’s MARR is 10% per year, what is the present worth of the project? Is it a sound investment opportunity?
A start up business is considering two types of equipment - data are as follows: TYPE A TYPE B First Cost Annual operating cost Annual labor cost P200,000.00 32,000.00 50,000.00 P300,000.00 24,000.00 32,000.00 Insurance and property taxes 3% Payroll taxes 4% Estimated life 10 The minimum required rate of return is 15%. 3% 4% 10 Using present worth cost method, determine the value of alternative A and alternative B:
A fabrication company engaged in production with a capacity of 150, 000 pieces per year. But, it is just operating at 70% of its full capacity. The company has an annual income of P 250, 000.00, annual fixed cost are P 50, 000.00 and variable costs are P 1.00 per unit. How many productions of parts must be produced for break-even point? Given: Required: Solution: refer to this textbook: https://drive.google.com/file/d/1h4ra80IE8IRtYyja16iK6TtjCrTDi73j/view?usp=sharing
A corporation uses a type of motor truck which costs P 250,000, with life of 2 years and final salvage value P 40,000. If money is worth 4% and using the annual cost method, what should be the life, in years, of another type of truck for the same purpose whose that cost P 312,614 with final salvage value P 50,000? Select one: a. 2.5 b. 4 c. 3.5 d. 3
Given the two machines’ data Machine A Machine B First Cost P8,000.00 P14,000.00 Salvage value 0 2,000.00 Annual operation 3,000.00 2,400.00 Annual maintenance 1,200.00 1,000.00 Taxes and insurance 3% 3% Life, years 10 15 Money is worth at least 16% Using equivalent uniform annual cost method, determine the value of alternative A and alternative B: note:round off final answer to 2 decimal ANSWER for ALTERNATIVE A: ANSWER for ALTERNATIVE B:
A project is being considered that has a first cost of $12,500, creates $5000 in annual cost savings, requires $3000 in annual operating costs, and has a salvage value of $2000 after a project life of 3 years. If interest is 10% per year, which formula calculates the project’s present worth? (a) PW = 12,500(P/F, 10%, 1) + (− 5000 + 3000) (P/A, 10%, 3) − 2000(F/P, 10%, 3) (b) PW = − 12,500 + (5000 − 3000) (P/A, 10%, 3 ) − 2000(P/F, 10%, 3) (c) PW = 12,500(F/P, 10%, 3) + (5000 − 3000) (F/A, 10%, 3) + 2000 (d) PW = − 12, 500 + 5000(P/A, 10%, 3) − 3000 (P/A, 10%, 3) + 2000(P/F, 10%, 3)
1.b You are faced with a decision on an investment proposal. Specifically, the estimated additional income from the investment is $125,000 per year; the investment cost is $400,000; and the first year estimated expense of $20,000 and will increase a rate of 5% per year. Assume an 8-year analysis period, no salvage value, and MARR = 15% per year. What is the ERR ( Ԑ=MARR) of this proposal? show whole solution, not in excel please
Consider these two alternatives.Alternative A Alternative BCapital investment OMR 6000 7500Annual revenues OMR 1800 2250Annual expenses OMR 500 750Estimated market valueOMR1200 1600Useful life 10 10MARR 12% 1. Recommend which alternative should be selected.2. How much capital investment of the expensive alternative have to vary so that theinitial decision would be reversed.