Can you please show me the proper solution A man is considering investing P500, 000 to open a semi-automatic auto-washingbusiness in a city of 400, 000 population. The equipment can wash, on the average, 12cars per hour, using two men to operate it and to do small amount of hand work. Theman plans to hire two men, in addition to himself, and operate the station on an 8-hourbasis, 6 days per week, 50 weeks per year. He will pay his employees P25. 00 per hour.He expects to charge P25. 00 for a car wash. Out-of-pocket miscellaneous cost wouldbe P8, 500 per month.He would pay his employees for 2 weeks for vacations each year. Because ofthe length of his lease, he must write off his investment within 5 years. His capital now isearning 15%, and he is employed at a steady job that pays P25, 000 per month. Hedesires a rate of return of at least 20% on his investment. Would you recommend theinvestment?a) Use ROR methodb) Use Annual Worth methodc) Use present worth methodd) Use future worth methode) Solve for the payback periodf) Solve for the IRR

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Answered: A man is considering investing P500.000…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A man is considering investing P500, 000 to open a semi-automatic auto-washing business in a city of 400, 000 population. The equipment can wash, on the average, 12 cars per hour, using two men to operate it and to do small amount of hand work. The man plans to hire two men, in addition to himself, and operate the station on an 8-hour basis, 6 days per week, 50 weeks per year. He will pay his employees P25. 00 per hour. He expects to charge P25. 00 for a car wash. Out-of-pocket miscellaneous cost would be P8, 500 per month. He would pay his employees for 2 weeks for vacations each year. Because of the length of his lease, he must write off his investment within 5 years. His capital now is earning 15%, and he is employed at a steady job that pays P25, 000 per month. He desires a rate of return of at least 20% on his investment. Would you recommend the investment? c) Solve for the payback period d) Solve for the IRR
A man is considering investing P500, 000 to open a semi-automatic auto-washing business in a city of 400, 000 population. The equipment can wash, on the average, 12 cars per hour, using two men to operate it and to do small amount of hand work. The man plans to hire two men, in addition to himself, and operate the station on an 8-hour basis, 6 days per week, 50 weeks per year. He will pay his employees P25. 00 per hour. He expects to charge P25. 00 for a car wash. Out-of-pocket miscellaneous cost would be P8, 500 per month. He would pay his employees for 2 week for vacations each year. Because of the length of his lease, he must write off his investment within 5 years. His capital now is earning 15%, and he is employed at a steady job that pays P25, 000 per month. He desires a rate of return of at least 20% on his investment. Would you recommend the investment? Answer Anual cost=700,960 Excess= 19, 040 All I need is a solution for the problem. Our subject is engineering…
A man is considering investing P500, 000 to open a semi-automatic autowashing business in a city of 400, 000 population. The equipment can wash, on the average, 12 cars per hour, using two men to operate it and to do small amount of hand work. The man plans to hire two men, in addition to himself, and operate the station on an 8-hour basis, 6 days per week, 50 weeks per year. He will pay his employees P25. 00 per hour. He expects to charge P25. 00 for a car wash. Out-of-pocket miscellaneous cost would be P8, 500 per month. He would pay his employees for 2 weeks for vacations each year. Because of the length of his lease, he must write off his investment within 5 years. His capital now is earning 15%, and he is employed at a steady job that pays P25, 000 per month. He desires a rate of return of at least 20% on his investment. Would you recommend the investment?a) Use present worth methodb) Use future worth methodc) Solve for the payback period and the IRR
A man is considering investing P500, 000 to open a semi-automatic auto-washing business in a city of 400, 000 population. The equipment can wash, on the average, 12 cars per hour, using two men to operate it andto do small amount of hand work. The man plans to hire two men, inaddition to himself, and operate the station on an 8-hour basis, 6 days perweek, 50 weeks per year. He will pay his employees P25. 00 per hour. Heexpects to charge P25. 00 for a car wash. Out-of-pocket miscellaneouscost would be P8, 500 per month.He would pay his employees for 2 weeks for vacations each year.Because of the length of his lease, he must write off his investment within 5years. His capital now is earning 15%, and he is employed at a steady jobthat pays P25, 000 per month. He desires a rate of return of at least 20% onhis investment. Would you recommend the investment?a) Use ROR methodb) Use Annual Worth methodc) Use present worth methodd) Use future worth methode) Solve for the payback period and the…
7. after a lengthy meeting with the marketing team about a new product being introduced, your boss asks you to look into the project. the marketing team is estimating a 15 yer profit of $220,000 (annuity). That amount is expected to grow by an additional $25,000 (gradient) each year through year 5, level off at year five's amount through year 10, then decrease by $15,000 per year (decreasing gradient) through year 15. You determine that the initial cost of the production system will be $1,600,000. What is the PW of this project if the MARR is 25%? Enter your answer to the nearest whole dollar amount
A man is considering investing P 500,000 to open a semi-automatic washing business in a city of 400,000 population. The equipment can wash on the average 12 cars per hour using two men to operate it and to do small amount of handwork. The man plans to hire two men in addition to himself and operate the station on an 8-hour basis, 6 days per week, 50 weeks per year. he will pay his employees P 25.00 per hour. He expects to charge P 25.00 for a car wash. Out of pocket miscellaneous cost would be P 8,500 per month. He would pay his employees for 2 weeks for vacations each year. Because of the length of his lease, he must write off his investment within 5 years. His capital now is earning 15% and he is employed at a steady job that pays P 25,000 per month. He desires a rate of return of at least 20% on his investment. Would you recommend the investment? Use ROR method and Annual Worth method.
A pharmaceutical company has spent $500 million to date working on a blood pressure treatment. It has to decide whether to spend another $500 million today to get final approval from the FDA in two years. Once approved, expected profits will be $50 million per year for the foreseeable future. The firm’s cost of capital is 5%. -Should the firm proceed? (Hint: use the perpetuity formula used to value projects found in the readings to find the value of the profit stream that starts in two years, and then discount that.)
Give typing answer with explanation and conclusion You own a small engineering consulting company. If you invest $200,000 of the company’s money in a natural gas well that is expected to provide income of $29,000 per year, how long must the well produce at that rate in order to get the money back plus a rate of return of 10% per year? P = A[(1+i)^n -1 / i(1+i)^n]
A production plant has the capacity to produce 2,000 tons per year. At full capacity, there are total variable costs of Php 100,000,000 and fixed costs of Php 35,000,000.a. What is the annual profit for the plant when working at full capacity (2,000 tons) and the product sells for Php 40 per pound?b. What is the total cost per pound at full capacity?
A cell phone company has a fixed cost of $1,000,000 per month and a variable cost of $22 per month per subscriber. The company charges $33 per month to its cell phone customers. a.What is the annual breakeven point for this company? b. The company currently has 95,000 subscribers and proposes to raise its monthly fees to $39.95, what is the new annual break-even point if the variable cost increases to $25 per customer per month? c.lf 20,000 subscribers will drop their services because of mönthly increase in part (b), will the company still be profitable?
U.S. Census Bureau statistics show that the annual earnings for persons with a high school diploma are $35, 220 versus $57, 925 for someone with a bachelor’s degree. If the cost of attending college is assumed to be $35, 000 per year for 4 years and the forgone earnings during those years are assumed to be $35, 220 per year, what rate of return does earning a bachelor’s degree represent? Use a 25-year study period. In your analysis, you are expected to: (i) Use Excel to display the cash flow; (ii) Draw a Cash Flow Diagram; (iii) Use Excel to compute the internal rate of return of the CFD. (Hint: The investment in years 1 through 4 is the cost of college plus the foregone earnings, and the income in years 5 through 25 is the difference in income between a high school diploma and a bachelor’s degree.) Use excel
Kaneb is evaluating two alternative pipeline welders. Welder A costs $310,000, has a 7-year life, and is expected to generate net cash inflows of $78,000 in each of the 7 years. Welder B costs $320,000, has a 5-year life, and is expected to generate annual net cash inflows of $68,900 in each of the 5 years. Kaneb's cost of capital is 16%. Using the equivalent annual annuity method, which alternative should be chosen and what is its NPV?

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A man is considering investing P500.000 open a semi.