EBK CONTEMPORARY ENGINEERING ECONOMICS
EBK CONTEMPORARY ENGINEERING ECONOMICS
6th Edition
ISBN: 9780134123950
Author: Park
Publisher: PEARSON CUSTOM PUB.(CONSIGNMENT)
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Chapter 7, Problem 5P
To determine

Calculate the return on investment.

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Recently, an Internet service provider (ISP) in the United Kingdom implemented a “no-strings U.S.-style flat-rate plan” whereby its commercial subscribers can send and receive unlimited volume (measured in gigabytes) up to a cap of 10,000 gigabytes (per month) via their broadband Internet service for a flat monthly fee of £399.99. Under the old “metered plan,” Alistair Willoughby Cook sent and received a grand total of 3,500 gigabytes over his broadband connection and paid £399.99 in usage fees in a typical 30-day month. If all customers are exactly like Alistair, what is the impact of the flatrate plan on consumer welfare and the company’s profits? Explain.
By outbidding its competitors, Turbo Image Processing (TIP), a defense contractor, has received a contract worth $7,300,000 to build navy flight simulators for U.S. Navy pilot training over two years. For some defense contracts, the U.S. government makes an advance payment when the contract is signed, but in this case, the government will make two progressive payments: $4,300,000 at the end of the first year and the $3.000,000 balance at the end of the second year. The expected cash outflows required in order to produce these simulators are estimated to be $1,000,000 now, $2.000,000 during the first year, and $4,320,000 during the second year. The expected net cash flows from this project are summarized as follows: In normal situations, TIP would not even consider a marginal project such as this one in the first place. However, hoping that TIP can establish itself as a technology leader in the field. management felt that it was worth outbidding its competitors by providing the lowest…
The Tuition Prepayment Option (TPO) offered by many colleges provides savings by eliminating future tuition increases. When you enroll in the plan, you prepay all remaining undergraduate tuition and required fees at the rate in effect when you enter the plan. Tuition and fees (not including room and board) for the 2011-2012 academic year are $37,489 at Harvard University. Total undergraduate tuition for an entering freshman at this rate is $149,956. Tuition, fees, room, and board normally increase each year, but it is difficult to predict by how much, since costs depend on future economic trends and institutional priorities. The following chart lists thetuition and required fee rates since 2007: Academic Year          Tuition and Fees      Required Prepayment2007-2008                           $31,665                        $126,6602008-2009                           $32,882                        $131,528 2009-2010                          $33,983…
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