EBK CONTEMPORARY ENGINEERING ECONOMICS
EBK CONTEMPORARY ENGINEERING ECONOMICS
6th Edition
ISBN: 8220101336736
Author: Park
Publisher: PEARSON
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Chapter 5, Problem 47P
To determine

Calculate the present worth.

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Consider the following two mutually exclusive service projects with projectlives of three years and two years, respectively. (The mutually exclusive service projects will have identical revenues for each year of service.) The interest rate is known to be 12%.                             Net Cash Flow                End of Year        Project A          Project B                      0                    -$1,000                -$800                     1                        -400                  -200                     2                        -400              -200+0                     3                -400+200 If the required service period is six years and both projects can be repeated with the given costs and better service projects are unavailable in the future, which project is better and why? Choose from the following options:(a) Select Project B because it will save you $344 in present worth over the required service period.(b) Select Project A because it will cost $1,818…
Payback Period and Net Present Value If a project with conventional cash flows has a payback period less than the project’s life, can you definitively state the algebraic sign of the NPV? Why or why not? If you know that the discounted payback period is less than the project’s life, what can you say about the NPV? Explain.   Q
You are considering developing an​ 18-hole championship golf course that requires an investment of ​$18,000,000. This investment cost includes the course​ development, club​ house, and golf carts. Once​ constructed, you expect the maintenance cost for the golf course to be ​$640,000 in the first​ year, ​$695,000 in the second year and continue to increase by $55,000 in subsequent years. The net revenue generated from selling food and beverage will be about 17​% of greens fees paid by the players. The cart fee per player is ​$20​, and 40,000 rounds of golf are expected per year. You will own and operate the course complex for 9 years and expect to sell it for ​$24,000,000. What is the greens fee per round that will provide a return on investment of 17​%? Assume that the greens fee will be increased at an annual rate of 6​%. The greens fee that will provide a return on investment of 17​% is _____ per round. ​(Round to the nearest​ cent.)
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