8s.3 Auburn Recreation and Parks Department is considering two mutually exclusive proposals for a new softball complex on a city-owned lot Seating Сараcity Annual Annual Required Investment Alternative Design Benefits Costs A1 3,000 $194,000 $87,500 $800,000 A2 4,000 $224,000 $105,000 $1,000,000 The complex will be useful for 30 years and has no appreciable salvage value (regardless of seating capacity). Assuming an 8% discount rate which of the following statements is incorrect? a. Select A1 because it has the largest B/C ratio. b. Select A1 because it has the most benefits per seating capacity. c. Select A1 because it has the largest PW. d. Select A1 because the incremental benefits generated from A2 are not large enough to offset the additional investment ($200,000 more than A1).

8s.3 Auburn Recreation and Parks Department is considering two mutually exclusive proposals for a new softball complex on a city-owned lot Seating Сараcity Annual Annual Required Investment Alternative Design Benefits Costs A1 3,000 $194,000 $87,500 $800,000 A2 4,000 $224,000 $105,000 $1,000,000 The complex will be useful for 30 years and has no appreciable salvage value (regardless of seating capacity). Assuming an 8% discount rate which of the following statements is incorrect? a. Select A1 because it has the largest B/C ratio. b. Select A1 because it has the most benefits per seating capacity. c. Select A1 because it has the largest PW. d. Select A1 because the incremental benefits generated from A2 are not large enough to offset the additional investment ($200,000 more than A1).

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

Chapter1: Introduction And Goals Of The Firm

Section: Chapter Questions

Problem 2.5CE: Energy entrepreneur T. Boone Pickens has proposed converting the trucking fleet in the United States...

See similar textbooks

Similar questions

It costs $750 per year to maintain a locker room. If the interest rate is6.0%, how much must be set aside to pay for maintenance on each locker room without touching the principal? Group of answer choices A. $13,500 B. $12,000 C. $6,000 D. $12,500
I want you to provide me the Cash Flow diagram of the problem. Only cash flow diagram, the solution is already there. Thanks in advance! The annual estimated cash flow is $140,000. The salvage value will be 12% of the initial price after 5 years. The discount rate (r) is 18% Let us assume the initial price of the doughnut machine be X. PV of cash inflows=PV of cash outflows$140,000×PVAF4,18%+.12X×PVF5,18%=X$140,000×2.69006180465+.12X×0.43710921621=X$376,608.652651=X-0.05245310594$376,608.652651=0.94754689406XX=$397,456.479475 The maximum purchase price of the doughnut machine is $397,456.48.
5-4 Solar Panel Installation A university spent $1.8 million to install solar panels atop a parking garage. These panels will have a capacity of 500 kW, have a life expectancy of 20 years and suppose the discount rate is 10%. a. If electricity can be purchased for costs of $0.10 per kWh, how many hours per year will the solar panels have to operate to make this project break even? b. If efficient systems operate for 2,400 hours per year, would the project break even? c. The university is seeking a grant to cover capital costs. How big of a grant would make this project worthwhile (to the university)?
The annual cost to maintain a cemetery plot is $75. If interest is 6% how much must be set asideto pay for perpetual maintenance?a. $1,150b. $1,200c. $1,250d. $1,300
Suppose that the cost of an investment is €12000 and its return is €5000 per year for three years. At the end of the three years, the value of the equipment is zero. Calculate the net present value (NPV) if the discount rate is 5%. Give only a numerical answer with no symbols. Use a point (.) as a decimal separator and nothing as a thousand separator (e.g., 2325.37 and not 2.325, 37).
Edinburgh Newcastle £000 £000Franchise fee (year 0) 8,700 7,950New buses (year 0) 4,120 3,890Scrap value (year 5) 110 95Forecast net cash inflowsYear 1 3,780 3,500Year 2 4,150 3,850Year 3 4,550 4,200Year 4 5,120 5,150Year 5 4,900 4,950 calculate the payback period for both the…
1) Calculate the payback period, the discounted payback period and the NPV for the following project using a rate of 5%. Time Cash Flow 0 - $63,000 1 - $ 21,000 2 - $ 21,000 3 - $ 21,000 4 - $ 21,000 Payback = Discounted Payback =
4.) A piece of equipment is required for a project. Consider the two options. For each option, determine the following: a. A Cash Flow Diagram b. The Present Worth for a period of ten years c. Estimated Break-Even Point I. Option 1: Initial cost to purchase is equipment is $450,000. Annual O&M costs are $1,200 per year starting at the end of the second year. Estimated annual savings for the new piece of equipment is $60,000 starting at the end of the first year. The interest rate for purchasing the equipment is 6%. The salvage value is expected to be $110,000 at the end of 8 years. II. Option 2: Leasing the new piece of equipment would cost $45,000 per year. Annual O&M costs are $1,800 per year starting at the end of the second year. Estimated annual savings for the new piece of equipment is $55,000 starting at the end of the first year. The interest rate for leasing the equipment is 6%. A credit of $4,000 is expected beginning at the fourth year for leasing the equipment.
You are considering options from two roofing contractors to fix your roof. Option A will last you 10 years and cost $50,300 whereas Option B will last 15 years and cost $68,200. If you are planning to take a home equity loan from your bank, at what interest rate would you be indifferent to the two options. (Hint: Use Goal Seek) 3.82% 4.55% 5.15% 6.72%
Johnson Controls spent more than $2.5 millionretrofitting a government complex and installing acomputerized energy-management system for theState of Massachusetts. As a result, the state’s energybill dropped from an average of $6 million a yearto $3.5 million. Moreover, both parties will benefitfrom the 10-year life of the contract. Johnson recovers half the money it saved in reduced utility costs(about $1.2 million a year over 10 years); Massachusetts has more money to spend on other things. Whatis the rate of return realized by Johnson Controls inthis energy-control system?
kuzukuzu12121@outlook.com just sent here I NEED EXCEL FİLE. Determine the NPW, AW, FW and IRR of the following engineering project. Initial Cost ($400,000) The Study Period 15 years Salvage (Market) Value of the project 15% of the initial cost Operating Costs in the first year($9,000) Cost Increase 3% per year Benefits in the first year $40,000 Benefit Increase 9% per year MARR 8% per year Is the Project acceptable? WHY?
Nestle Ltd. It produces its premium plant food in 50 Kg bags. Demand is 100,000 Kgs. per week and the plant operates 52 weeks each year. Nestle can produce 250,000 Kgs. per week. The setup cost is OMR 200 and the annual holding cost rate is OMR 0.30 per bag. What will the optimal duration of the downtime in years? a. 0.065. None is correct ac 0.069 d. 0.088 e. 0.721 f. 0.076