A certain masonry dam requires 200,000 m³ of gravel for its construction. The contractor found two possible sources for the gravel with the following data: Source A Source B Average distance, gravel pit to dam site 3 km 1.2 km Gravel cost/m³ at pit ➖➖➖➖➖ P10 Purchase price of pit P800,000 Road construction necessary P450,000 Overburden to be removed at P4.20/m³ 90,000m³ ➖➖➖➖➖➖ Hauling cost/m³/km P4 P4 What is the Total Cost of Source A
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- A firm is considering the “make vs. buy” question for a subcomponent. If the part is made in-house, the production data would be: first cost = $350, 000; annual costs for operation = $45, 000; salvage value = $15, 000; project life = 5 years; interest = 10%; and material cost per unit = $8.50. If annual production is 10,000 units, the maximum amount that the firm should be willing to pay to an outside vendor for the subcomponent is nearest? (a) $10 per unit (b) $16 per unit (c) $22 per unit (d) $28 per unit?Please no written by hand and no emage Solve in excel Carp, Inc. wants to evaluate two machines for packaging their products.Machine A:Initial cost is $700,001st year O&M cost is 18,000; this cost increases $900 each year.The annual benefits are $154,000It can be sold at the end of 10 years useful life for $145,000 Machine B:Initial cost is $1,600,001st year O&M cost is 28,000; this cost increases $650 each year.The annual benefits are $300,000It can be sold at the end of 20 years useful life for $210,000The companies uses an interest rate of 15% Use annual cash flow analysis to decide which is the most desirable alternative.Task Description Precedence Time (days) cost($) crash time (days) Per day revised cost Preparation of drawings and permits - 14 72,500 10 10,000 Calling and letting of tenders - 68 166,750 66 23,000 Site preparation and excavation A 6 116,000 4 16000 Pouring the foundation A 24 250,000 24 - Framing C,D 40 145,000 30 20000 Plumbing and electrical work D 18 159,500 12 22000 Interior finished F 16 108,750 12 15000 Exterior finishes E,G 22 175,000 22 - Installing and commissioning new machines B,E 34 101,500 30 14000 Finishing touches and final work through H,I 32 64,000 32 - Calculate the minimum time and associate cost in which the project could be completed
- 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: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.Problem Solving. Solve the following problems completely. 4. Atty. Gacayan invested P280, 000 which will be used in a project that will produce auniform annual revenue of P180,000 for 5 years and then have a salvage value of 16% ofthe investment. Out-of-pocket costs for operation and maintenance will be P80,000 peryear. Taxes and insurance will be 3% of the first cost per year. Atty Gacayan expectscapital to earn not less than 30% before income taxes. Determine if the investment is goodand Calculate the following:a. Calculate using Rate of Return Method.b. Payback period of the investment.
- 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 METHODA municipal power plant uses natural gas from an existing pipeline at an annual cost of $40,000 per year. A new pipeline would initially cost $100,000, but it would reduce the annual cost to $10,000 per year. (a) Assume an analysis period of 25 years and no salvage value for either pipeline. The interest rate is 6%. Using the equivalent uniform annual cost (EUAC), should the new pipeline be built? (b) The power plant uses natural gas. What are some of the noneconomic benefits to the municipality of this energy source over others? Develop three primary advantages and disadvantages.Problem 4. In the design of an automobile engine part, an engineer has a choice ofeither steel casting or an aluminum alloy casting. Either machine provides the sameservice. However, the steel casting weighs 8 ounces, compared with 5 ounces for thealuminum casting. Every pound of extra weight in the automobile has been assigned apenalty of $6 to account for increased fuel consumption during the life cycle of the car.The steel casting costs $3.20 per pound, while the aluminum allow can be cast for $7.40per pound. Machining cost per casting are $5.00 for steel and $4.20 for aluminum.Which material should the engineer select, and what is the difference in unit costs? 1pound = 16 ounce
- 4. A government is planning to implement a new traffic control and surveillance system. The maintenance cost of the system is $1,200,000 per year. It is believed that the new system can help 3,000 driver saving 8 hours per year. The average wage of the people in this country is $150 per hour. It is expected that the system can be used for 5 years, i.e., the first benefit and cost are B1 and C1 respectively, while the last are B5 and C5. (a) What is the value of time saved by the new system per year? (b) Suppose the market interest rate is 5%. Calculate the net present value of this system. Should the system be launched? (c) Suggest two reasons to explain why the market interest rate in part (b) may be too high to evaluate the project. Should the system be launched if the interest rate is adjusted according to your suggestions?Fitzgerald, Ivy, Garcia, Nichols, Eudy, Williams, Thomas, Owens, and Nagy (FIGNEWTON) Inc. must replace its fig - crushing equipment. The alternatives under consideration are presented below. Alternative First Cost Net Annual Benefits Useful Life A $170, 500 $14, 675 5 years B 205,000 17,000 7 years C 242,500 16, 350 8 years D 290,000 14,825 10 years a) Which anlaysis method should be used to select the alternative? b) Why should that analysis method be used? c) if FIGNEWTON uses a MARR of 8%, what alternative should be chosen? d) if FIGNEWTON uses a MARR of 18%, what alternative should be chosen? Submit one excel file with answers a), b), c) and d) highlighted clearly.A new water treatment plant proposed for Anytown, has an initial cost of P56 million. The new plant will service the 7,500 residential customers for the next 30 years. It is expected to save each customer P125 per year. The plant will require a major overhaul every 5 years, costing P1 million. Determine the benefit/cost ratio at the city’s interest rate of 6%. (Use PW and EUAC) Please show the manual computation.