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Describe the process of determining the equivalent annual worth of the project and the unit profit per production?
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- Consider the following data of a company for the year 1999:Sales = Rs. 1,20,000Fixed cost = Rs. 25,000Variable cost = Rs. 45,000Find the BEP.Illustrate the process of computing the capital costs and equivalent annual operating costs?A contractor has an excavator requiring repairs within her fleet of cquipment for executing projects. She is offered $6,000 for the equipment by another contractor but refuses to sell. Other financial details of the excavator are as follows: Repair cost of $4,000 Useful life of 5 years At the end of year 1, the operation and maintenance cost is pegged at $2.000. This value increases by $1,000, S1,200, S1,400, and $1,600 for the following years. At the end of year 1, the salvage value is pegged at $6,000. This value decreases by 25% for the following years. The minimum acceptable rate of return (MARR) is 12%. Due to the constant use and operation and maintenance required, determine how long this equipment should be kept by the contractor. N.B. SHOW THE DETAILED WORKINGS FOR EACH YEAR. DO NOT STOP AT YEAR AFTER THE ECONOMIC LIFE.
- A manufacturing company leases a building for $100,000 per year for its manufacturing facilities. In addition, the machinery in this building is being paid for in installments of $20,000 per year. Each unit of the product produced costs $15 in labor and $10 in materials. The product can be sold for $40. what are the following 1. How many units per year must be sold for the company to breakeven? 2. If 10,000 units per year are sold, what is the annual profit? 3. If the selling price is lowered to $35 per unit, how many units must be sold each year for the company to earn a profit of $60,000 per year? 4. If the labor cost is increased by 10% and materials cost is increased by 5%, the number of units to break even is closest to:Corcoran Consulting is deciding which of two computer systems to purchase. It can purchase state-of-the-art equipment (System A) for $20,000, which will generate cash flows of $6,000 at the end of each of the next 6 years. Alternatively, the company can spend $12,000 for equipment that can be used for 3 years and will generate cash flows of $6,000 at the end of each year (System B). If the company’s WACC is 10% and both “projects” can be repeated indefinitely, which system should be chosen, and what is its EAA?ENGINEERING ECONOMY RATE WILL BE GIVEN. WRITE THE COMPLETE SOLUTIONS/EXPLANATION LEGIBLY OR TYPEWRITTEN. GIVE STRAIGHT TO THE POINT EXPLANATION. Two alternative designs are under consideration for a tapered fastening pin. The fastening pins are sold for $0.70 each. Either design will serve equally well and will involve the same material and manufacturing cost except for the lathe and drill operations. Design A will require 12 hours of lathe time and 5 hours of drill time per 1,000 units. Design B will require 7 hours of lathe time and 8 hours of drill time per 1,000 units. The variable operating cost of the lathe, including labor, is $18.60 per hour. The variable operating cost of the drill, including labor, is $16.90 per hour. Finally, there is a sunk cost of $5,000 for Design A and $9,000 for Design B due to obsolete tooling. a. Which design should be adopted if 125,000 units are sold each year?b. What is the annual saving over the other design?
- Note: Give me both a&b right solutions. I will give good rating. An intergated, combined cycle power plant produces 300 MW of electricity by gasifying coal. the captial investment for the plant is $630 million, spread evenly over two years. the operating life of the plant is expected to be 25 years. additionally the plant will operate at full capacity 76% of the time ( downtime is 24% of any given year ) the MARR is 9% per year a) if this plant will make a profit of two cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant ? is it a low-risk venture ? b) what is the IRR for the plant ? is it profitable ?What is the Equivalent Annual Operating Costs?The Ozzie Chocolate Company is preparing to offer a new product in its candy offerings, the Minty Dark Chocolate Bite bar. Material costs per new candy bar are $0.25 for chocolate, $0.02 for sugar, and $0.03 for mint flavoring. Labor costs of the new product are approximately $0.15 per bar. Adding a production line devoted to the new candy will cost $250,000 per year. (a) If the sales price is $1.40 per candy bar, how many must the company make per year in order to break even? Assume that each bar made is sold at full price. (b) What is the company’s profit or loss if they make and sell 270,000 candy bars at the $1.40 price in the first year? (c) About 20% of the food consumed in the U.S. is imported. Production in many industries has been offshored. What ethical issues do companies face when presented with the decision to move operations?
- Equipment was purchased 20 year ago for $500,000. The annual operating cost of the equipment has been $100,000 per year in each of years 1 to 20. What is the total annual cost of the equipment assuming at an interest rate of 15% per year compounded annually it the equipment has no salvage value? Treat all numbers as positive values.The Engineering Economist is a quarterly journal that once cost $20 for 1 year, $38 for 2 years, or $56 for 3 years. (a) What is the IRR for subscribing for 2 years rather than for 1 year at a time? (b) What is the IRR for subscribing for 3 years rather than for 1 year at a time?State the difference between a contingent project and a dependent project.