Apply incremental B/C analysis at an interest rate of 8% per year to determine which alternative should be selected. Alternative A Alternative B Initial cost, $ 600,000 300,000 Annual M&O costs, $/year 50,000 40,000 Income, $/year 10,000 8,000 Life, years
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- When comparing different-life alternatives by the B/C method, the alternatives should be compared over:Locations under consideration for a border patrol station have their costs estimated by the federal government. Use the B/C ratio method at an interest rate of 6% per year to determine which location to select, if any. Location North, N South, S Initial cost, $ 1.1 × 106 2.9 × 106 Annual cost, $ per year 480,000 390,000 Disbenefits, $ per year 70,000 40,000 Life, years ∞ ∞Gonzales, Inc. financed a new product as follows: $5 million in stock sales at 13.7% per year, $2 million in retained earnings at 8.9% per year, and $3 million through convertible bonds at 7.8% per year. The company’s WACC is closest to: (a) 9% per year (b) 10% per year (c) 11% per year (d) 12% per year
- A public-private partnership has been formed between a city, county, and construction/management company to attract a professional athletic team to the area. Assume you are the engineer with the company and are assisting with the benefit/cost analysis. The primary options are to construct a domed arena (DA) or a conventional stadium (CS), one of which will definitely be built. The DA option will cost $200 million to construct, have a useful life of 50 years, and require M&O costs of $360,000 the first year, increasing by $10,000 per year thereafter. In 25 years, a remodeling expenditure of $4,800,000 is predicted. The CS option will cost only $50 million to construct, have a useful life of 50 years, and require M&O costs of $175,000 the first year, increasing by $8000 per year. Periodic costs for repainting and resurfacing for the stadium are estimated at $100,000 every 10 years, except in year 50. Revenue from DA is expected to be greater than that from CS by $10,900,000 the…For each of the following problems, (a) draw the cash flow diagram; (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box. An engineer is trying to decide which process to use to reduce sludge volume prior to disposal. Belt filter presses (BFP) will cost $200,000 to buy and $80,000 per year to operate. Belts will be replaced one time per year at a cost of $5,500. Centrifuges will cost $400,000 to buy and $120,000 per year to operate, but because the centrifuge will produce a thicker cake, the sludge hauling cost to the monofill will be $30,000 per year less than for the belt presses. The useful lives are 5 and 10 years for BFP and the Centrifuge respectively. The salvage values are assumed to be 10% of the first cost of each process whenever they are closed down or replaced. The interest rate is 8%. the PW method and a study period of 15 years.For each of the following problems, (a) draw the cash flow diagram; (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box. An engineer is trying to decide which process to use to reduce sludge volume prior to disposal. Belt filter presses (BFP) will cost $200,000 to buy and $80,000 per year to operate. Belts will be replaced one time per year at a cost of $5,500. Centrifuges will cost $400,000 to buy and $120,000 per year to operate, but because the centrifuge will produce a thicker cake, the sludge hauling cost to the monofill will be $30,000 per year less than for the belt presses. The useful lives are 5 and 10 years for BFP and the Centrifuge respectively. The salvage values are assumed to be 10% of the first cost of each process whenever they are closed down or replaced. The interest rate is 8%. Use the PW method to select the more economical process.
- The cash flows for the following four alternatives are given below. You may assume the benefits occur throughout the year rather than just at the end of the year. Based upon payback period, the alternative that should be selected is given by the following option: Year A B C D 0 -$1000 -$900 -$950 -$2783 1 200 100 350 1200 2 200 200 350 1200 3 1200 300 350 1200 4 1200 300 350 1200 5 1200 700 350 1200 Group of answer choices B C A Select none DThe CFO for Woodsome Appliance Company Plant #A14 in Mexico City has five independent projects she can fund this year to improve surface durability on stainless steel products. The project investments and 18%-per-year PW values are as shown. What projects should be accepted if the investment limit is (a) no limit, and (b) $55,000? Initial PW at 18% Project Investment, $ per Year, $ 1 −15,000 −400 2 −25,000 8500 3 −20,000 500 4 −40,000 −5600 5 −52,000 9800Blue Whale Moving and Storage recently purchased a warehouse building in Santiago. The manager has two good options for moving palletsof stored goods in and around the facility. Alternative 1 includes a 4000-pound capacity, electric forklift (P = $-30,000; n = 12 years; AOC =$-1000 per year; S = $8000) and 500 new pallets at $10 each. The forklift operator’s annual salary and indirect benefits are estimated at $32,000.Alternative 2 uses two electric pallet movers (“walkies”) each with a 3000-pound capacity (for each mover, P = $-2000; n = 4 years; AOC = $-150 per year; no salvage) and 800 pallets at $10 each. The two operators’ salaries and benefits will total $55,000 per year. For both options, new palletsare purchased now and every two years that the equipment is in use. (a) If the MARR is 8% per year, use tabulated factors to determine which alternative is better. (b) Rework using a spreadsheet solution.
- For each of the following problems, (a) draw the cash flow diagram; (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box. NO EXCEL An engineer is trying to decide which process to use to reduce sludge volume prior to disposal. Belt filter presses (BFP) will cost $200,000 to buy and $80,000 per year to operate. Belts will be replaced one time per year at a cost of $5,500. Centrifuges will cost $400,000 to buy and $120,000 per year to operate, but because the centrifuge will produce a thicker cake, the sludge hauling cost to the monofill will be $30,000 per year less than for the belt presses. The useful lives are 5 and 10 years for BFP and the Centrifuge respectively. The salvage values are assumed to be 10% of the first cost of each process whenever they are closed down or replaced. The interest rate is 8%. Use the PW method to select the more economical process.Two production methods are proposed. Method A cost $60,000 initially, will have an operating cost (ANNUAL) of $28,000 per year, and salvage of $15,000. Method B will have a first cost of $120,000, operating cost of $8,500 per year (ANNUAL) and salvage value of $40,000. Both have 3 year life and use a MARR of 12%. Using PW, which one would you select? Answer neatly ASAP with proper explanation of it Thank youIf the B/C value is exactly 1.0 or very near 1.0, non-economic factors can assist make the decision for the best alternative. Select one: True False