PART 2 - C PROBLEM SOLVING PROBLEM NO.2 Compute the FW: $3500 market value productivity attributable to equipment për year (opērating costs have already been deducted from the reveňue) $8500 $8500 $8500 $8500 $8500 1 2 3 5 End of Year i= 25%/yr $23500 investment cost
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- You need to determine whether a project is profitable or not in a long run. Based on the data given, which of theseprojects will be profitable according to engineering economy methods?a. θ = 3 yrs., Net Value: 0b. Accumulated (without interest) net values of the revenues, expenses and investments after 5 years is +300.c. Accumulated (without interest) net values of the revenues, expenses and investments after 4 years is +100.d. θ = 6 yrs., Net Value: +400An oil company plans to purchase a piece of vacant land at the corner of two busy streets for $50,000. On properties of this type, the company installs businesses of three different types. Each has an estimated useful life of 15 years. The salvage value for each is estimated to be the $50,000 land cost. Plan Cost (in addition to land cost) Type of business Net annual income A $ 83,000 Conventional gas station $ 26,500 B $ 195,000 Add automatic car wash $ 39,750 C $ 115,000 Add quick car wash $ 31,200 if the oil company expects a 10% rate of return on its investments, which plan (if any) should be selected? Use incremental analysis, before tax.A firm has received an order from customer X to be executed for RO1,800 ( all inclusive). The order requires the following materials, labour etc. Materials Requirements In stock Book value Replacement cost per kg Realizable value per kg A 100kg 50kg RO 250 RO 7 RO 3 B 300kg 140kg RO 280 RO 3 RO 1 Labour: Department I : 10 hrs @ RO15 Department II : 8 hrs @ RO12 Variable Overhead : RO 150 Material A is regularly used by the firm and if used on this order has to be replaced for the use of other orders. Material B has no use and is the result of excessive purchase made for an order executed two years ago. Labour in department I is available for this order but labour in department II is fully engaged on another order which is earning a contribution of RO 20 per hour and if the order from X is to be executed, labour in department II has to be diverted from current operations. State whether the order received from customer X has to accepted.