Required: 1) Compute the payback on the project. 2) Compute the net present value of the project.
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- What is the total effect on the economy of a government tax rebate of $500 to each household in order to stimulate the economy if each household will spend of the rebate in goods and services?In the original RedBrand problem (Example 5.4), suppose that the company could add up to 100 tons of capacity, in increments of 10 tons, to any single plant. Use SolverTable to determine the yearly savings in cost from having extra capacity at the various plants. Assume that the capacity will cost $28,000 per ton right now. Also, assume that the annual cost savings from having the extra capacity will extend over 10 years, and that the total 10-year savings will be discounted at an annual 10% interest rate. How much extra capacity should the company purchase, and which plant should be expanded? (Hint: Use the PV function to find the present value of the total cost saving over the 10-year period. You can assume that the costs occur at the ends of the respective years.)The Newcoat Painting Company has for some time been experiencing high demand for its automobile repainting service. Because it has had to turn away business, management is concerned that the limited space available to store cars awaiting painting has cost them in lost revenue. A small vacant lot next to the painting facility has recently been made available for rental on a long-term basis at a cost of $10 per day. Management believes that each lost customer costs $20 in profit. Current demand is estimated to be 21 cars per day with exponential interarrival times (including those turned away), and the facility can service at an exponential rate of 24 cars per day. Cars are processed on a FCFS basis. Waiting space is now limited to 9 cars but can be increased to 20 cars with the lease of the vacant lot. Newcoat wants to determine whether the vacant lot should be leased. Management also wants to know the expected daily lost profit due to turning away customers if the lot is leased. Only…
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- 2- A multimedia company anticipates that there will be a demand for 20,000 copies of acertain DVD during the next year. It costs the company $0.40 to store a DVD for oneyear. Each time it must make additional DVDs, it costs $250 to set up the equipment.How many DVDs should the company make during each production run to minimize itstotal storage and setup costs?First Securities, Inc., an investment firm, has $380,000 on account. The chief investment officer would like to reinvest the $380,000 in a portfolio that would maximize return on investment while at the same time maintaining a relatively conservative mix of stocks and bonds. The following table shows the investment opportunities and rates of return. Investment Opportunity Rate of Return Municipal Bonds (X1) 0.095 High Tech Stock (X2) 0.146 Blue Chip Stock (X3) 0.075 Federal Bonds (X4) 0.070 a) The Board of Directors has mandated that at least 60 percent of the investment consist of a combination of municipal and federal bonds, at least 25 percent Blue Chip Stock, no more than 30 percent High Tech and Blue Chip Stock, and no more than 15 percent High Tech Stock. Based on above problem, how many constraints are in this problem? A) 3 B) 4 C) 5 D) 2 b) Based on part a, which of the…The Transit Authority (TA)in a metropolitan area operates a subway line that currently carries an average of 6000 passengers per day commuting between the suburbs and downtown. The fare now is $3.00 per ride and the board of the TA is considering raising its price by $0.50 to generate a larger revenue. A study reveals that for each $0.50 increase in fare, the ridership will be reduced by an average of 1000 passengers per day. Using this study, the board determines that, to get maximum profit, the price of the ticket should remain at $3.00. Is this correct? Explain why or why not.