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Question 1) The following details are provided by a manufacturing company.
|
|
Product line |
|
Investment |
$1,100,000 |
|
Useful life |
12 years |
|
Estimated annual net |
$385,000 |
|
Estimated annual net cash inflows for second year |
$395,000 |
|
Estimated annual net cash inflows for next ten years |
$300,000 |
|
Residual value |
$50,000 |
|
|
Straight-line |
|
Required |
12% |
Calculate the payback period for the investment.
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- Find the Break Even Quantity of production for the following information. Given: Investment = $300,000 Salvage = $20,000 interest = 15% N (period) = 7 Annual Expenses = $15,000 Gross Margin per unit = $75 Variable cost per unit = $15 Depreciation is Straight Line USE MICROSOFT EXCEL FORMAT SHOW FORMULAS USEDA five-year project has an initial fixed asset investment of $613,600, an initial net working capital investment of $22,200. The project will have an annual operating cash flow (OCF) of (-$76,540). The fixed asset is fully depreciated over the life of the project and has no salvage value. The net working capital will be recovered when the project ends. The required return is 11.7 percent. What is the project's equivalent annual cost, or EAC? O-$248,052.76 O-$182,309.18 O-$147,884.01 O $242,212.22Firm 1 has £10,000 to invest. Firm 2 offers Firm 1 the following proposal: invest £10,000now and get £11,000 back in 12 months. The returns on this investment are guaranteed, and there are no other costs involved? What should Firm 1 do? b. Firm 1 is considering investing their profit into any of the following two projects. Investment appraisal techniques have been used, and the following results found: Project A Project B Internal Rate of Return 6% 8% Net present value 88000 61000 which project should Firm 1 select?
- [1] A manufacturer plans to introduce a new type of shirt based on the following information. The selling price is $35.00; variable cost per unit is $15.00; fixed costs are $8200.00; and capacity per period is 740 units. a) Calculate the break-even point (i) in units (ii) in dollars (iii) as a percent of capacity b) Draw a detailed break-even chart. c) Calculate the break-even point (in units) if fixed costs are reduced to $7000.00 d) Calculate the break-even point (in dollars) if the selling price is increased to $40.00 ANSWER WITH PROPER SOLUTIONS PLEASESubject: Engineerings Economics Topics:1. Declining Balance Method (DBM)2. Double Declining Balance Method(DDBM)3. SYD4. Service Output Method5. Uniform Arithmetic Gradient( one problem) Please help me to solve this in step by step manner. Make sure to analyze the question well.BOX your final answer Question: An office equipment cost P14,000, has a useful life of 12 years and a salvage value of P1,000. Using sum of years digit method, find the value of the depreciation during the first year.1 You want to implement an automatic control in the production process of a factory. The cost Initial is $130,000, useful life is 10 years, and salvage value is zero. It is estimated that it will produce a net savings of $60,000 per year, before depreciation, interest, and taxes. They have two financing alternatives. The first (A) is a credit from the equipment supplier for 60% of the total cost, 6% annual interest, in five equal annual payments, the first at the end of the first year. The second (B) is a bank loan for the entire amount of the investment with a 12% annual interest that must be settled in four equal annuities, the first at the end of the first year. The equipment is depreciated on a straight line basis, 50% taxes are paid and the MARR of the company is 10%. Determine the best financing alternative from the point of economic view, using mixed TMAR and an analysis period of 10 years. Answer: NPV = $122,637.43; NPVB = $98,317.42. Option A must be selected.
- ENGINEERING ECONOMICS A man deposit ₱1,00,000,000 for one year which pay an annual interest of 6%. The income is taxable and the bank charges a withholding tax of 20% tax rate. Compute the after tax rate of return in his deposit. SHOW COMPLETE SOLUTON ON A PAPER.1. Which of the following statements is incorrect?(a) Economic decisions are time invariant.(b) Time and risk arc are the most important factors in any investment evaluation.(c) For a large-scale engineering project, engineers must consider the impact of the project on the company’s financial statements.(d) One of the primary roles of engineers is to make capital expenditure decisions. 2 When evaluating a large-scale engineering project, which of the following items is important?(a) Expected profitability(b) Timing of cash nows(c) Degree of financial risk(d) All of the above 3. Which of the following statements defines the discipline of engineering economics most closely?(a) Economic decisions made by engineers.(b) Economic decisions related to financial assets.(c) Economic decisions primarily for real assets and service from engineering projects.(d) Any economic decision related to the time value of money. 4.Which of the following statements is not one of the four fundamental…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: +400
- 5 Mr. H Salt purchased an 1/8 interest in a producing oil well for $45,000. Recoverable oil reserves for the well were estimated at that time at 15,000 barrels, 1/8 of which represented Mr. Salt's share of the reserves. During the subsequent year, Mr. Salt received $12000 as his 1/8 share of the gross income from the sale of 1000 barrels of oil. From this amount, he had to pay $3000 as his share of the expense of producing the oil. Compute Mr. Salt's depletion allowance for the year.7 A fixed asset costing $80,000 and having an estimated salvage value of $6000 has a life expectancy of 10 years. Compare the results of Double declining, Sum of the year digits depreciation methods by filling in below columns: Sum of the year's Digits method: Year Depreciation Expense Accumulated Depreciation Book value End of the year 1 2 3 4 Double Declining Method: Year Depreciation Expense Accumulated Depreciation Book value End of the year 1 2 3 4Hajia Timber Ltd (GTL) produces and exports lumber and planks. It owns a plant whichhas value of GHC 1,800,000 as at 1 January 2010. The government of Ghana,passes alegislation that restricts the exportation of lumber. Consequently GTL has to reduceproduction by 40%. Cash flow forecast for the next five years included in the budgetsubmitted for management approval in January 2010 shows the following:Year Cash flows (GHC)2010 552,0002011 506,0002012 376,0002013 250,0002014 560,000The cashflow forecast for 2014 includes expected proceeds from disposal of the plant. Thecash flow projections also ignore the effects general upwards movement in prices.It is estimated that if the plant is sold in January 2010, it would realize the net proceeds ofGHC 1,320,000. The costs of capital for GBL is 15% (ignoring inflationary effect)RequiredCalculate the recoverable amount of the plant and impairment loss (if any).
