There are two mutually exclusive proposals for a for a flood control project in Illinois. The first proposal involves an initial outlay of $1,350,000 and annual expenses of $110,000. This plan is assumed to be permanent. The second proposal requires an initial outlay of $700,000, followed by $200,000 every 12 years thereafter. Annual expenses for the second proposal are estimated to be $95,000 for the first 12 years and $150,000 each year there after. Annual benefits are identical for both projects, and terminal salvage values are negligible. The interest rate is 6% per year. Which proposal should be recommended?

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A: Net present value is the excess of present value of inflows over outflows.

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A: We shall use LCM method to find the best alternative.       so, lcm of useful life = 12 years

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A:

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A: Location 1 :- Payback = Initial investment / Annual Cash flows               = (1,50,000 / 30,000)…

Q: A company project needs to establish a fund within a ten-year period by making annual deposits of…

A: Beginning of the year deposits (B) = P 90000 Let the end of the year deposits = X r = 6.2% n = 10…

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A: Introduction:-  The following two options for delivering water to a newly constructed community are…

Q: A regional municipality is studying a water supply plan for its tri-city and surrounding area to the…

A: Initial Cost = 25 Million Interest Rate = 6%

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Q: Prime Financial Inc. is evaluating two capital investment proposals for a drive-up ATM kiosk, each…

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Q: a flood control  dam is being proposed for construction. The initial cost is estimated to be…

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Q: For each of the following projects, determine the relevant cash flows, and depict the cash flows on…

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Q: A certain government funded city flood control system has an initial investment cost of $500,000.…

A: Initial Investment = $500,000 Operating Cost every year = $10,000 Every 5 years the repair and…

Q: The cost of maintaining a public monument in Washington, D.C. occurs as periodic outlays of $10,000…

A: given, periodic outlays = $10,000 no of years = 5 rate = 10%

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A: Cost = $30 million per year for 5 years Interest Rate = 9% maintenance and repairs cost = $3…

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A: Step1: Calculating the amount will need to be funded today to meet the complete funding requirements…

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A: Operating expenses are the expenses that are generally incurred during regular business operations.…

Q: The Highway Department expects the cost of maintenance for a piece of heavy construction equipment…

A: The value of money varies with time, therefore the time value of money considers the worth of the…

Q: he City of Vancouver has appointed you as an Assistant Project Manager to oversee the aspect of some…

A: Capital Budgeting is the process of determining, selecting, and evaluating the long-term investment…

Q: n the following set of projects from a roadway agency, determine the Minimum Attractive Rate of…

A: A suitable rate of return developed for the appraisal of alternatives is known as the MARR.

Q: A road is constructed at the capital cost of $10 million.  At the end of Year 10, major improvements…

A: Annualized Cost refers to equivalent cost that is incurred on project on annual basis. It is…

Q: A new flood control project is expected to involve expenditures for periodic heavy maint mance as…

A: Equivalent annual cost is the estimated cost incurred per year of a machine. It is calculated by…

Q: Suppose Project A and Project B are mutually exclusive. Project A requires an initial cash outlay of…

A: Crossover rate is the cost of capital where two projects have the same net present values (NPV). We…

Q: You are evaluating three mutually exclusive public-works projects with the respective costs and…

A: In this question, we have been given 3 projects and the life of all three projects has been given 30…

Q: The state of Glottamora has $100 million remaining in its budget for the current year. One…

A: “Since you have posted a question with multiple subparts, we will solve first three subparts for…

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A: Calculation of B/C is shown below: Hence, option C is correct.

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A: In this we have to find out total present value of all cost.

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Q: An investment project will involve spending $270,000 at the beginning of the project and $450,000 at…

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A: Step1: Calculating the amount will need to be funded today to meet the complete funding requirements…

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A: Cash-Flow diagram shows cash flows that an investment proposal will generate over its life. Cash…

Q: A local municipality is considering investing $220,000 to upgrade a park. Based on similar…

A: Calculation of Benefit Cost Ratio Benefit Cost Ratio = Present value of Benefits/ Present Value of…

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A: The Benefit to Cost ratio is used to find out how risky the project is and to compare equivalent…

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A: If the dams are constructed in 3 places the incremental benefits and costs would be -

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A: PV is the current worth of cash flows that are expected to occur in the future.

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.