Given four proposals for funding a new project with a 100M limit on capital funding and the MARR is established at 12% per year. Project First Cost Estimated Annual Savings Project Life, Years 12M 5M 3 25M 7.3м 4 Y 45M 12.1M 6 6ом 9M 8 Use the exact internal rate of return method to determine which of the four independent projects should be funded. Write the value of the acceptable project accordingly/in sequence (W/XY/Z). ANSWER for ALTERNATIVE 1: Blank 1 ANSWER for ALTERNATIVE 2: Blank 2 Blank 1 Add your answer

Given four proposals for funding a new project with a 100M limit on capital funding and the MARR is established at 12% per year. Project First Cost Estimated Annual Savings Project Life, Years 12M 5M 3 25M 7.3м 4 Y 45M 12.1M 6 6ом 9M 8 Use the exact internal rate of return method to determine which of the four independent projects should be funded. Write the value of the acceptable project accordingly/in sequence (W/XY/Z). ANSWER for ALTERNATIVE 1: Blank 1 ANSWER for ALTERNATIVE 2: Blank 2 Blank 1 Add your answer

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Given four proposals for funding a new project with a 100M limit on capital funding and the MARR is established at 12% per year. Project First Cost Estimated Annual Savings Project Life, Years A 12M 5M 3 B 25M 7.3M 4 C 45M 12.1M 6 D 60M 9M 8 Use the exact internal rate of return method to determine which of the four independent projects should be funded. Write the value of the acceptable project accordingly/in sequence (A/B/C/D). ANSWER for ALTERNATIVE 1: Blank 1 ANSWER for ALTERNATIVE 2: Blank 2
An electric cooperative is considering the use of a concrete electric pole in the expansion of its powerdistribution lines. A concrete pole costs 18,000 each and will last 20 years. The company is presentlyusing creosoted wooden poles which cost 12,000 per pole and will last 10 years. If money is worth 12percent, which pole should be used? Assume annual taxes amount to 1 percent of the first cost and zerosalvage value in both cases. Determine the best alternative using: (i = 12%)a. Annual Cost (AC) Methodb. Equivalent Uniform Annual Cost (EUAC) Methodc. Present Worth Cost (PWC) Method
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?
MANUAL SOLUTIONS NOT EXCELDOWNVOTE IF EXCELDetermine the difference between the capitalized cost of the timber and steel penstock for a hydroelectric plant with interest of 10%: Timber Steel First Cost Php50,000 Php80,000 Estimated Life 10 years 30 years Scrap Value Php2,000 None Annual Maintenance Php1,200 Php200 Show calculations for the capitalized cost of each item separately.
You are faced with a decision on an investment proposal. Specifically, the estimated additional income from the investment is $125,000 per year; the investment cost is $400,000; and the first year estimated expense of $20,000 and will increase a rate of 5% per year. Assume an 8-year analysis period, no salvage value, and MARR = 15% per year. a. Calculate the PW and FW of this proposal? b. What is the ERR ( Ԑ=MARR) of this proposal? c. What is the Simple and Discounted payback? include the cash flow diagram and conclusion
You are faced with a decision on an investment proposal. Specifically, the estimated additional income from the investment is $125,000 per year; the investment cost is $400,000; and the first year estimated expense of $20,000 and will increase a rate of 5% per year. Assume an 8-year analysis period, no salvage value, and MARR = 15% per year. a. Calculate the PW and FW of this proposal? b. What is the ERR ( Ԑ=MARR) of this proposal? c. What is the Simple and Discounted payback? (Upload the picture of your complete solutions including the correct cash flow diagram and your conclusion.)
Calisto Launch Services is an independent space corporation and has been contracted to develop and launch one oftwo different satellites. Initial equipment will cost $750,000 for the first satellite and $850,000 for the second.Development will take 5 years at an expected cost of $150,000 per year for the first satellite; $120,000 per year forthe second. The same launch vehicle can be used for either satellite and will cost $275,000 at the time of the launch5 years from now. At the conclusion of the launch, the contracting company will pay Calisto $2,500,000 for eithersatellite.Calisto is also considering whether they should consider launching both satellites. Because Calisto would haveto upgrade its facilities to handle two concurrent projects, the initial costs would rise by $150,000 in addition to thefirst costs of each satellite. Calisto would need to hire additional engineers and workers, raising the yearly costs to atotal of $400,000. An additional compartment would be added to…
An assembly operation at a software company now requires $100,000 per year in labor costs. A robot can be purchased and installed to automate this operation. The robot will cost $200,000. Maintenance and operation expenses of the robot are estimated to be $64,000 per year for the first 2 years and $10,000 thereafter. Replacement of minimal parts will cost $5000 every 3 years. Invested capital must earn at least 12% per year. What is the capitalized cost? (Draw cash flow diagram and show complete solution)
A project has an initial cost of $65,000, expected net cash inflows of $11,000 per year for 12 years, and a cost of capital of 11%. What is the project's MIRR? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to two decimal places.
A design change being considered by Mayberry, Inc., will cost $6,000 and will result in an annual savings of $1,000 per year for the 6-year life of the project. A cost of $2,000 will be avoided at the end of the project as a result of the change. MARR is 8%/yr. Solve, a. What is the internal rate of return of this investment? b. What is the decision rule for judging the attractiveness of investments based on internal rate of return? c. Should Mayberry implement the design change?
A company would like to invest on a project. The rate the company uses to justify their investments, i.e. the MARR is 25% per year (compounded yearly). Their estimations about the projects are as follows: Initial Cost: ($300,000)The Study Period: 15 yearsSalvage (Market) Value of the Project: 20% of the initial cost 1-) What is the capital recovery cost, CR? 2-) Operating costs in the first year are estimated to be ($7,500) and these operating costs are estimated to increase by 5% per year. Construct cash flow table and determine the minimum amount of annual revenue ($ per year?) that makes this investment an attractive option for the company? (i.e. what is Equivalent UNIFORM (Annual) Cost, EU(A)C?) 3-) Benefits in in the first year are estimated to be $30,000 and these benefits are estimated to increase by 13% per year. Construct cash flow table and determine the net present value/worth of the project, NPW. 4-) What is the simple payback period? 5-) Determine IRR of…
A project capitalized for P5,000,000 is expected to earn a uniform annual revenue of P1,000,000 in 10 years. The cost of operation and maintenance is P100,000 a year, taxes and insurance will cost 3% of the first cost per year. If the company expects its capital to earn 12% income before taxes, would you recommend investing in the project? Use the PW method. Determine the present worth of income.Determine the present worth of cost.Will it be worthwhile to invest for the apartment?