Q1) A company is planning to expand its production operations, it has threealternatives which has the cash flow as represent in the table below, suggest the bestProject using the Equivalent Annual Worth Comparison Method if you know that theinterest rate is (10%).DetailsSalvagevalueInvestmentcost (CU/Life(year)revenue|(CU/year) year)amount(CU)Project 1 | 2300 000Project 2 1900 000Project 3 2800 000|(CU)300 000550 000400 000100 000650 000155 000550 000500 000400 000All projects need a maintenance for some machines every three years (CU) whichequal to 100 000 cu for all projects.There is a revenue in the 2nd year of project 1 equal to 170 000There is a revenue in the 5th year of project 2 equal to 200 000There is a revenue in the 3rd year of project 3 equal to 250 000693

Before investing in any project, profitability of the project is evaluated by using various methods…

Q1) A company is planning to expand its production operations, it has three alternatives which has the cash flow as represent in the table below, suggest the best Project using the Equivalent Annual Worth Comparison Method if you know that the interest rate is (10%). cost (CU/ Salvage value Details Investment Life(year) revenue |(CU/year) year) amount Project 1 Project 2 Project 3 (CU) 2300 000 1900 000 (CU) 300 000 400 000 100 000 650 000 155 000 550 000 9 2800 000 550 000 500 000 400 000 3 All projects need a maintenance for some machines every three years (CU) which equal to 100 000 cu for all projects. There is a revenue in the 2nd year of project 1 equal to 170 000 There is a revenue in the 5th year of project 2 equal to 200 000 There is a revenue in the 3rd year of project 3 equal to 250 000

Q1) A company is planning to expand its production operations, it has three alternatives which has the cash flow as represent in the table below, suggest the best Project using the Equivalent Annual Worth Comparison Method if you know that the interest rate is (10%). cost (CU/ Salvage value Details Investment Life(year) revenue |(CU/year) year) amount Project 1 Project 2 Project 3 (CU) 2300 000 1900 000 (CU) 300 000 400 000 100 000 650 000 155 000 550 000 9 2800 000 550 000 500 000 400 000 3 All projects need a maintenance for some machines every three years (CU) which equal to 100 000 cu for all projects. There is a revenue in the 2nd year of project 1 equal to 170 000 There is a revenue in the 5th year of project 2 equal to 200 000 There is a revenue in the 3rd year of project 3 equal to 250 000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 22E

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