A civil engineer has 2 alternative designs for a house. Both designs involve the acquisition of a work force that will be provided by the owner and other capital equipment to be used for this construction only. a. Design 1 calls for a workforce consisting of 5 men each costing P500/day. This design will be finished in 4 months. b. Design 2 calls for a workforce consisting of 10 men each costing P350/day and is expected to be finished in 3 months. In addition, there will be a project engineer who will supervise the work and will be paid P1200/day. His supervision will be required during the entire construction period. Disregarding material cost, how much is the total salary expenses for Design 1 and for Design 2. Assume that there are 24 working days in a month.

A civil engineer has 2 alternative designs for a house. Both designs involve the acquisition of a work force that will be provided by the owner and other capital equipment to be used for this construction only. a. Design 1 calls for a workforce consisting of 5 men each costing P500/day. This design will be finished in 4 months. b. Design 2 calls for a workforce consisting of 10 men each costing P350/day and is expected to be finished in 3 months. In addition, there will be a project engineer who will supervise the work and will be paid P1200/day. His supervision will be required during the entire construction period. Disregarding material cost, how much is the total salary expenses for Design 1 and for Design 2. Assume that there are 24 working days in a month.

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter26: Capital Budgeting (capbud)

Section: Chapter Questions

Problem 5R

See similar textbooks

Similar questions

A civil engineer involved in construction management must decide between two ways to pump concrete up to the top floors of a seven-story office building under construction. Plan 1 requires the purchase of equipment for $6000 which costs between $0.40 and $0.75 per metric ton to operate, with a most likely cost of $0.50 per metric ton. The asset is able to pump 100 metric tons per day. If purchased, the asset will last for 5 years, have no salvage value, and be used 50 days per year. Plan 2 is an equipment-leasing option and is expected to cost the company $2500 per year for equipment with a low cost estimate of $1800 and a high estimateof $3200 per year. In addition, an extra $5 per hour labor cost will be incurred for operating the leased equipment each 8-hour day. Use i = 12% per year. (a) Which plan should the engineer recommend on the basis of the most likely estimates of costs? (b) Will the decision above change if the pessimistic estimates are used?
. In connection with surfacing a new highway, acontractor has a choice of two sites on which toset up the mixing plant equipment.The contractor estimates that it will cost P51.75per cubic meter per kilometer to haul the asphaltpaving material from the mixing plant to the jobsite.If site B is selected, there will be an addedcharge of P600 per day for a flagman and it needs 2 flagman.The job requires 50,000 cubic meters of mixedasphalt paving material. It is estimated that fourmonths (17 weeks of five working days perweek) will be required for the job.
A mechanical engineer is considering two robots for improving materials handling in the production of rigid shaft couplings that mate dissimilar drive components. Robot X has a first cost of $84,000, an annual maintenance and operation (M&O) cost of $31,000, a $40,000 salvage value, and will improve net revenues by $96,000 per year. Robot Y has a first cost of $146,000, an annual M&O cost of $28,000, a $47,000 salvage value, and will increase net revenues by $119,000 per year. Which one should be selected on the basis of a rate of return analysis if the company’s MARR is 15% per year? Use a three-year study period.
The project manager of a steel manufacturing factory in Hamilton puts forth a proposal to the senior management for the immediate purchase of a specialized machine that costs $2,750,000. She forecasted that it would increase the profits through improved productivity by $1,200,000 in the first year, $1,150,000 in the second year, and $960,400 in the third year. At the end of the third year, the machine would have a salvage value of $500,000.Compute the NPV and determine if this is a sound investment proposal for a cost of capital of:a) 10%?b) 15%?c) 20%?
ABC Corporation has hired you to evaluate a new FOUR year project for the firm. The project will require the purchase of a $773,300.00 work cell. Further, it will cost the firm $56,300.00 to get the work cell delivered and installed. The work cell will be straight-line depreciated to zero with a 20 -year useful life. The project will require new employees to be trained at a cost of $72,900.00. The project will also use a piece of equipment the firm already owns. The equipment has been fully depreciated, but has a market value of $6,300.00. Finally, the firm will invest $10,400.00 in net working capital to ensure the project has sufficient resources to be successful. The project will generate annual sales of $918,000.00 with expenses estimated at 37.00% of sales. Net working capital will be held constant throughout the project. The tax rate 38.00%. The work cell is estimated to have a market value of $500,000.00 at the end of the fourth year. The firm expects to reclaim 90.00% of the…
A process control manager is considering two robots to improve materials handling capacity in the production of rigid shaft couplings that mate dissimilar drive components. Robot X has a first cost of $84,000, an annual M&O cost of $31,000, a $40,000 salvage value, and will improve revenues by $96,000 per year. Robot Y has a first cost of $146,000, an annual M&O cost of $28,000, a $47,000 salvage value, and will increase revenues by $119,000 per year. The company’s MARR is 15% per year and it uses a 3-year study period for economic evaluations. Which one should the manager select (a) on the basis of ROR values, and (b) on the basis of the incremental ROR value? (c) Which is the correct selection basis? Perform the analysis by hand or spreadsheet, as instructed.
For a construction job, a contractor can haul rock by means of an ordinary 10 cubic yard dump truck, or he can use a combination rig where a 10 cubic yard truck also pulls an 8 cubic yard trailer. When this combination is used, the trailer slides into the empty dump truck body for the return trip. The total equivalent operating cost, including the driver, amortization of capital, interest on the investment, fuel, and maintenance is P625/hour for the dump truck and P875/hour for the tandem rig. For the required 10-mile haul, the loading and unloading, hauling, and return times are as follows; Time, minutes Conventional Double Rig Loading 3 5 Unloading 4 10 Hauling 24 28 Return 20 24 How much is the difference in cost per unit volume between the two alternatives?
A software package created by Navarro & Associates can be used for analyzing and designing three-sided guyed towers and three- and four-sided self-supporting towers. A single-user license will cost $4000 per year. A site license has a one-time cost of $15,000. A structural engineering consulting company is trying to decide between two alternatives: first, to buy one single-user license now and one each year for the next 4 years (which will provide 5 years of service), or second, to buy a site license now. Determine which strategy should be adopted at an interest rate of 12% per year for a 5-year planning period using present worth evaluation.
There are two alternatives for the place where a factory will be constructed. For the 1st alternative, the initial cost is $2,830,000. The rent of the area where the plates produced in the factory will be stored is $117,000 per year. It is estimated that the annual operating and maintenance cost of the factory will be $26,500 and the annual energy cost will be $42,500. The economic life of the factory is 8 years. For the 2nd alternative, the initial cost is $3,434,000. The produced plates will be stored inside the factory. It is estimated that the annual operating and maintenance cost of the factory will be $44,500 and the annual energy cost will be $63,000. The economic life of the factory is 6 years. The interest rate of 12% per year compounded quarterly will be used for the payments to be made to the bank. Determine the most economically suitable option using the Net Present Value (NPV) analysis with the least common multiple (LCM) approach. !!Net cash flow diagrams must be…
A mechanical engineer who designs and sells equipment that automates manual labor processes is offering a machine/robot combination that will significantly reduce labor costs associated with manufacturing garage-door opener transmitters. The equipment has a first cost of $170,000, an estimated annual operating cost of $54,000, a maximum useful life of 5 years, and a $20,000 salvage value anytime it is replaced. The existing equipment was purchased 12 years ago for $65,000 and has an annual operating cost of $78,000. At most, the currently owned equipment can be used 2 more years, at which time it will be auctioned off for an expected amount of $6000, less 33% paid to the company handling the auction. The same scenario will occur if the currently owned equipment is replaced now. Determine the defender and challenger estimates of P, n, S, and AOC in conducting a replacement analysis today at an interest rate of 20% per year.
The manager of a carpet manufacturing plant became concerned about theoperation of a critical pump in one of the processes. After discussing this situation with the supervisor of plant engineering, they decided that a replacement study should be done, and that a nine-year study period would be appropriate for this situation. The company that owns the plant is using a before-tax MARR of 10% per year for its capital investment projects. The existing pump, Pump A, including driving motor with integrated controls, cost $17,000 five years ago. An estimated MV of $750 could be obtained for the pump if it were sold now. Some reliability problems have been experienced with Pump A, including annual replacement of the impeller and bearings at a cost of $1,750. Annual operating and maintenance expenses have been averaging $3,250. Annual insurance and property tax expenses are 2% of the initial capital investment. It appears that the pump will provide adequate service for another nine years if the…
A software package created by Navarro & Associates can be used for analyzing and designing three-sided guyed towers and three- and foursided self-supporting towers. A single-user license will cost $4000 per year. A site license has a onetime cost of $15,000. A structural engineering consulting company is trying to decide between 2 alternatives: first, to buy one single-user license now and one each year for the next four years (which will provide five years of service), or second, to buy a site license now. Determine which strategy is more economical at an interest rate of 12% per year for a 5-year planning period. Apply the present worth method of evaluation.