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Q2 Mega Holding is a contractor company specialise in bridge construction. The company has been offered two projects to construct a bridge at two different locations. However, based on its capability, the company can only accept one project at a time. A cost estimation has been made in order to decide which project should be undertaken and the cost factors relating to the two projects are shown in Table Q2. Table Q2 COST FACTORS PROJECT A PROJECT B 8 beams, 16 columns RM 2,500 RM 30,848 Concrete beams and columns needed| 6 beams, 12 columns Equipment rental (per month) Site investigation Labour cost: O Design engineer |(11) Field/construction engineer RM 1,000 RM 40,636 RM 150 per hour RM 100 per hour RM 130 per hour RM 90 per hour The design phase for both projects take 3 months and the construction phase take 9 months which in total of 12 months are needed to complete each project (with 6 working days per week and 8 working hours per day). The volume for each beam and column are 500 m' and 314 m' respectively. The cost of concrete is RM 65 per unit volume. The revenue for the bridge construction comes from the toll payment by the users of the bridge. The fees for each automobile that passes through the bridge is RM 1.10 per automobile on average. The average number of automobile passes through the bridge is 60,000 per year (a) Calculate the total cost for both projects (b) Choose the best project and state your reason. From your answer in (b), determine how many years the company start making a profit. (c)

Q2 Mega Holding is a contractor company specialise in bridge construction. The company has been offered two projects to construct a bridge at two different locations. However, based on its capability, the company can only accept one project at a time. A cost estimation has been made in order to decide which project should be undertaken and the cost factors relating to the two projects are shown in Table Q2. Table Q2 COST FACTORS PROJECT A PROJECT B 8 beams, 16 columns RM 2,500 RM 30,848 Concrete beams and columns needed| 6 beams, 12 columns Equipment rental (per month) Site investigation Labour cost: O Design engineer |(11) Field/construction engineer RM 1,000 RM 40,636 RM 150 per hour RM 100 per hour RM 130 per hour RM 90 per hour The design phase for both projects take 3 months and the construction phase take 9 months which in total of 12 months are needed to complete each project (with 6 working days per week and 8 working hours per day). The volume for each beam and column are 500 m' and 314 m' respectively. The cost of concrete is RM 65 per unit volume. The revenue for the bridge construction comes from the toll payment by the users of the bridge. The fees for each automobile that passes through the bridge is RM 1.10 per automobile on average. The average number of automobile passes through the bridge is 60,000 per year (a) Calculate the total cost for both projects (b) Choose the best project and state your reason. From your answer in (b), determine how many years the company start making a profit. (c)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter17: Long-term Investment Analysis
Section: Chapter Questions
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Q2 Mega Holding is a contractor company specialise in bridge construction. The company has been offered two projects to construct a bridge at two different locations. However, based on its capability, the company can only accept one project at a time. A cost estimation has been made in order to decide which project should be undertaken and the cost factors relating to the two projects are shown in Table Q2. Table Q2 COST FACTORS Concrete beams and columns needed Equipment rental (per month) Site investigation Labour cost: 6 Design engineer (ii) Field/construction engineer PROJECT A 6 beams, 12 columns RM 1,000 RM 40,636 PROJECT B 8 beams, 16 columns RM 2,500 RM 30,848 RM 150 per hour RM 100 per hour RM 130 per hour RM 90 per hour The design phase for both projects take 3 months and the construction phase take 9 months which in total of 12 months are needed to complete each project (with 6 working days per week and 8 working hours per day). The volume for each beam and column are 500 m and 314 m' respectively. The cost of conerete is RM 65 per unit volume. The revenue for the bridge construction comes from the toll payment by the users of the bridge. The fees for each automobile that passes through the bridge is RM 1.10 per automobile on average. The average number of automobile passes through the bridge is 60,000 per year (a) Calculate the total cost for both projects (b) Choose the best project and state your reason. From your answer in (b), determine how many years the company start making a profit. (c)
Transcribed Image Text:Q2 Mega Holding is a contractor company specialise in bridge construction. The company has been offered two projects to construct a bridge at two different locations. However, based on its capability, the company can only accept one project at a time. A cost estimation has been made in order to decide which project should be undertaken and the cost factors relating to the two projects are shown in Table Q2. Table Q2 COST FACTORS Concrete beams and columns needed Equipment rental (per month) Site investigation Labour cost: 6 Design engineer (ii) Field/construction engineer PROJECT A 6 beams, 12 columns RM 1,000 RM 40,636 PROJECT B 8 beams, 16 columns RM 2,500 RM 30,848 RM 150 per hour RM 100 per hour RM 130 per hour RM 90 per hour The design phase for both projects take 3 months and the construction phase take 9 months which in total of 12 months are needed to complete each project (with 6 working days per week and 8 working hours per day). The volume for each beam and column are 500 m and 314 m' respectively. The cost of conerete is RM 65 per unit volume. The revenue for the bridge construction comes from the toll payment by the users of the bridge. The fees for each automobile that passes through the bridge is RM 1.10 per automobile on average. The average number of automobile passes through the bridge is 60,000 per year (a) Calculate the total cost for both projects (b) Choose the best project and state your reason. From your answer in (b), determine how many years the company start making a profit. (c)
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