Operations Management: Processes and Supply Chains, Student Value Edition Plus MyLab Operations Management with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134855424
Author: Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman
Publisher: PEARSON
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Chapter 4, Problem 12P
The Astro World amusement park has the opportunity to expand its size now (the end of year 0) by purchasing adjacent property for $250,000 and adding attractions at a cost of $550,000. This expansion is expected to increase attendance by 30 percent over projected attendance without expansion. The price of admission is $30, with a $5 increase planned for the beginning of year 3. Additional operating costs are expected to be $100,000 per year. Estimated attendance for the next five years, without expansion, is as follows:
- What are the pretax combined cash flows for years 0 through 5 that are attributable to the park’s expansion?
- Ignoring tax,
depreciation , and the Lime value of money, determine how long it will take to recover (pay back) the investment.
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The Astro World amusement park has the opportunityto expand its size now (the end of year 0) by purchasingadjacent property for $250,000 and adding attractions ata cost of $550,000. This expansion is expected to increaseattendance by 30 percent over projected attendance with-out expansion. The price of admission is $30, with a $5increase planned for the beginning of year 3. Additionaloperating costs are expected to be $100,000 per year.Estimated attendance for the next five years, withoutexpansion, is as follows:
a. What are the pretax combined cash flows for years 0through 5 that are attributable to the park’s expansion?b. Ignoring tax, depreciation, and the time value of money,determine how long it will take to recover (pay back) theinvestment.
What is the future worth (in Year 10) of $23,000 deposited at the end of Year 3 plus $28,000 deposited at the end of Year 5, and $20,000 deposited at the end of Year 8 at an interest rate of 5% per year?
Kabelo and Hendrik are joint owners of Fitness Gym. They are currently investigating the option of investing in cryotherapy, a cold therapy that may reduce inflammation in tendons or joints. Their investment would provide Fitness Gym members with equipment which may be used to reduce post-exercise recovery times, at an additional cost. The addition of cryotherapy to the gym represents a strategic service for Fitness Gym. Which one of the following statements reflect the importance of capital-investment projects such as the example above.
a.
The relative magnitude of the amounts involved.
b.
The short-term nature of capital-investment decisions.
c.
The operational nature of capital-investment projects.
d.
The direct effect of the time value of money on capital-investment projects.
Chapter 4 Solutions
Operations Management: Processes and Supply Chains, Student Value Edition Plus MyLab Operations Management with Pearson eText -- Access Card Package (12th Edition)
Ch. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - The Dahlia Medical Center has 30 labor rooms, 15...Ch. 4 - A process currently services an average of 50...Ch. 4 - An airline company must plan its fleet capacity...Ch. 4 - Food Goblin Supermarkets use both cashiers and...Ch. 4 - Returning to Problem 4, under both assumption of...Ch. 4 - Purple Swift manufactures birdhouses in lots of...Ch. 4 - Macon Controls produces three different types of...Ch. 4 - Up, Up, and Away is a producer of kites and wind...
Ch. 4 - Tuff-Rider, Inc. manufactures touring bikes and...Ch. 4 - Arabelle is considering expanding the floor area...Ch. 4 - The Astro World amusement park has the opportunity...Ch. 4 - Kim Epson operates a full-service car wash, which...Ch. 4 - MKM International is seeking to purchase a new CNC...Ch. 4 - Prob. 17PCh. 4 - Prob. 18PCh. 4 - Prob. 19PCh. 4 - Dawson Electronics is a manufacturer of high-tech...Ch. 4 - A manager is trying to decide whether to buy one...Ch. 4 - Acme Steel Fabricators experienced booming...Ch. 4 - Referring to Problem 7, the operations manager at...Ch. 4 - Darren Mack owns the Gas n’ Go convenience store...Ch. 4 - Prob. 25PCh. 4 - Prob. 1VCCh. 4 - Prob. 2VCCh. 4 - How does Southwest Airlines know they are...Ch. 4 - Prob. 4VCCh. 4 - Prob. 1CCh. 4 - Prob. 2CCh. 4 - Prob. 3C
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