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- Identify the following as primarily private or public sector characteristics:a. Large investmentb. No profitsc. Funding from feesd. MARR-based selection criteriae. Low interest ratef. Short project life estimateg. DisbenefitsAll of the following are factors that affect the effective MARR of a project, except: (a) Project risk (b) Product selling price (c) Availability of capital (d ) Attractiveness of other investment opportunitiesA firm has a capital budget of $30,000 and is considering three possible independent projects. Project A has a present outlay of $12,000 and yields $4,231 per annum for 5 years. Project B has a present outlay of $10,000 and yields $4,184 per annum for 5 years. Project C has a present outlay of $17,000 and yields $5,802 per annum for 10 years. Funds which are not allocated to one of the projects can be placed in a bank deposit. Identify seven combinations of project investments and a bank deposits which exhaust the budget. Which of the above combinations should the firm choose when the bank deposit rate is (i) 15% or (ii) 20%? Explain your answer and show your work. Suppose there is no option to deposit in the bank, but the projects are "divisible" (e.g. you may have 25% of project A). Which combination should the firm choose? Explain your answer and show your work. Use 15% as the deposit rate (discount rate).
- based on net worth analysis, which of the following project is acceptableExamine the sensitivity of the project to changes in the manufacturing throughput, discount rate and gross marginb) Kenya is in the advanced stages of preparing to manufacture COVID-19 vaccines locally. The Ministry of Health has identified a number of facilities all over the country for consideration for the manufacture of one or more of three vaccines; Johnson and Johnson (JJ), AstraZeneca (AZ) and Pfizer (PF). A feasibility study done by the ministry found out the following: 145 have capacity to manufacture JJ and PF 112 have capacity to manufacture JJ and AZ 156 have capacity to manufacture AZ and PF 321 have capacity to manufacture AZ 35 have no capacity to manufacture any of the three vaccines 79 have capacity to manufacture JJ and AZ but not PF The number that has capacity to manufacture JJ only is equal to those that have capacity to manufacture PF only. The number that has capacity to manufacture PF only is twice those that have capacity to manufacture AZ only Required (i) Present this information on a Venn diagram and hence determine the number of facilities…
- Canadian oil company is considering whether or not to develop a site it has been exploring for the past six months. One of the arguments for developing the site is that considerable time and money have already been expended. This cost should not be included in the capital budgeting decision because it is: Unsure A.sunk cost B.An agency cost C.An operating cost D.A financing cost E.An opportunity costAll of the following are correct when a capital budgeting problem is solved using the 0-1 integer linear programming model, except: (a) Partial investment in a project is acceptable. (b) The objective is to maximize the present worth of the investments (c) Budget constraints may be present for the first year only or for several years. (d) Contingent and dependent project restrictions may be consideredAlternative locations for an advanced wastewater recycling plant are being evaluated using four attributes identified as attributes 1, 2, 3, and 4 with weights of 0.4, 0.3, 0.2, and 0.1, respectively. If the value rating scale is from 1 to 10, and the ratings are 3, 7, 2, and 10 for attributes 1, 2, 3, and 4, respectively, the weighted attribute measure R is closest to: (a) 3.7 (b) 3.9 (c) 4.0 (d) 4.7
- The decision matrix below indicates the profit expected from four alternatives under four states of nature. Select the preferred alternative by applying each of the following criteria:Four proposals (A, B, C, and D) are available for investment. Proposals A and C cannot both be accepted; Proposal B is contingent upon the acceptance of either Proposal C or D; and Proposal A is contingent on D. a. List all possible combinations of proposals and clearly show which are feasible. b. Of the ten principles, which one(s) is(are) well illustrated by this problem? c. Of the systematic economic analysis technique’s 7 steps, which one(s) is(are) well illustrated by this problem?There are five independent projects that must be evaluated on the basis of the profitability index. (a) Given an investment limit of $35 million and a MARR of 10% per year, select from the projects. (b) Write the spreadsheet function for a project, specifically for project 5, which will correctly display the PI value used to rank the project. First Cost, NCF, Life, Project $1000 $1000/Year Years 1 −4,000 900 7 2 −7,000 1,900 10 3 −17,000 2,900 15 4 −15,000 3,600 10 5 −30,000 5,000 8