MKBIC Systems is evaluating four projects A, B, C and D that have risks associated with the producing benefits. Based on the data given in the table below, which project is the best alternative?
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- In the Southern Company Managerial Challenge, which alternative for complying with the Clean Air Act creates the greatest real option value? How exactly does that alternative save money? Why? Explain why installing a scrubber burns this option.Energy entrepreneur T. Boone Pickens has proposed converting the trucking fleet in the United States to liquefied natural gas (LNG) and using wind power to replace the missing LNG in electric power production. What infrastructure issues do you see that must be resolved before the Pickens plan could be adopted?I want you to provide me the Cash Flow diagram of the problem. Only cash flow diagram, the solution is already there. Thanks in advance! The annual estimated cash flow is $140,000. The salvage value will be 12% of the initial price after 5 years. The discount rate (r) is 18% Let us assume the initial price of the doughnut machine be X. PV of cash inflows=PV of cash outflows$140,000×PVAF4,18%+.12X×PVF5,18%=X$140,000×2.69006180465+.12X×0.43710921621=X$376,608.652651=X-0.05245310594$376,608.652651=0.94754689406XX=$397,456.479475 The maximum purchase price of the doughnut machine is $397,456.48.
- List the potential costs, benefits, and disbenefits that should be considered in evaluating a potential nuclear power plant. What stakeholder viewpoints will need to be considered?Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote. A company wants to buy a production device for their new factory. They have two alternatives, whose cash flows are given in the following table. Salvage value is 20% of the initial cost. According to these cash flows, choose the best alternative knowing their payback periods. Alternative A Alternative B Initial Cost Annual Income Useful Life P3,000,000 P3,500,000 P1,200,000 P1,000,000 4 vears 8 years"Mary is in contract negotiations with a publishing house for her new novel. She has two options. OPTION 1: She may be paid $90000 up front, and receive royalties that are expected to total $30000 at the end of each of the next 6 years. Alternatively, OPTION 2: she can receive $100000 up front and no royalties. Which of the following investment rules would indicate that she should take Option 1, given a discount rate of 5%? Rule I: The Net Present Value rule; Rule II: The Payback Rule with a payback period of 2 years.
- Assume that you are approached to assess a venture of building another bridge. Which of the following factors is the LEAST important in terms of engineering economics. a. number of vehicles in the city b. current interest rate c. cost structure d. service life of the bridgeA university spent $1.8 million to install solar panels atop a parking garage. These panels will have a capacity of 500 kw, have a life expectancy of 20 years and suppose the discount rate is 10%. If electricity can be purchased for costs of$0.10 per kwh, how many hours per year will the solar panels have to operate to make this project break even? If efficient systems operate for 2,400 hours per year, would the project break even? The university is seeking a grant to cover capital costs. How big of a grant would make this project worthwhile (to the university)?During your first month as an employee at Engro. Industries (a large drill-bit manufacturer),you are asked to evaluate alternatives for producing a newly designed drill bit on a turningmachine. Your boss’ memorandum to you has practically no information about what thealternatives are and what criteria should be used. The same task was posed to a previousemployee who could not finish the analysis, but she has given you the following information:An old turning machine valued at $350,000 exists (in the warehouse) that can be modified forthe new drill bit. The in-house technicians have given an estimate of $40,000 to modify thismachine, and they assure you that they will have the machine ready before the projected startdate (although they have never done any modifications of this type). It is hoped that the oldturning machine will be able to meet production requirements at full capacity. An outsidecompany, Descon Engg. Inc., made the machine seven years ago and can easily do the…
- There are two types of projects in the market: A (safer) and B (riskier). At time 1, the payoff of A will be either $500 (probability 0.75) or $300 (probability 0.25). The appropriate discount rate for project A is 12%. The minimum price A can accept is $350. The payoff of B will be either $800 (probability 0.2) or $100 (probability 0.8). The appropriate discount rate for project B is 20%. In this simple economy, there are 90% chance that the project will be A. Evaluate the funding situation, i.e., which type of project will be funded and the price, based on the following scenarios: When there is no information asymmetry and everyone knows everything. When there is information asymmetry and investors cannot tell if the project is A or B.There are two types of projects in the market: A (safer) and B (riskier). At time 1, the payoff of A will be either $500 (probability 0.75) or $300 (probability 0.25). The appropriate discount rate for project A is 12%. The minimum price A can accept is $350. The payoff of B will be either $800 (probability 0.2) or $100 (probability 0.8). The appropriate discount rate for project B is 20%. In this simple economy, there are 90% chance that the project will be A. Evaluate the funding situation, i.e., which type of project will be funded and the price, based on the following scenarios: If an honest information service firm exists in the market that can separate A from B and provide credible certification. What is the maximum price that the agent can charge for the service? If a bank exists and can provide partial financing and tell the difference between A & B but cannot verify the outcomes, what will be the maximum face values of loans to each project?1. Coal provide a cheap source of energy and it is a major source of energy for the world. Coal consumption is hampered mainly by a. Environmental concerns b. Technological concerns c. Political concerns d. Financial concerns 2. JJ Alfred Ltd. Is an energy company and their financing comes from 60% equity and 40% debt, risk free rate is 3% and expected market rate is 10%, loan interest is 8% and tax deductible under a tax rate of 28%, beta (β) is 1.4 showing higher risk. What is the WEIGHTED AVERAGE COST OF CAPITAL a. 9.3% b. 9.2% c. 9.1% d. 9.0.% 4. A producer holding a commodity is said to be _______________ and could hedge by going __________ a futures contract a. Long long b. Long short c. Short short d. Short long 5. __________________refers to the benefits of holding some inventory rather than completely depending on the futures market for supply a. Contract yield b. Convenience yield c. Storage benefit d. Holding benefit 5. In the LNG business value chain, which of the…
