Chapter 9, Problem 7RQ

1* Suppose you are a project manager of a power plant project and there is a penalty in your contract with the main client for every day you deliver the project late. You need to decide which sub-contractor is appropriate for your projects critical path activities. But while selecting a sub-contractor, you should take into consideration the costs and delivery dates.Sub-contractor 1 bids $250,000. You estimate that there is a 30% possibility of completing 60 days late. As per your contract with the client, you must pay a delay penalty of $5,000 per calendar day for every day you deliver late.Sub-contractor 2 bids $320,000. You estimate that there is a 10% possibility of completing 20 days late. As per your contract with the client, you must pay a delay penalty of $5,000 per calendar day for every day you deliver late.You need to determine which sub-contractor is appropriate for your projects critical path activities. Both sub-contractors promise successful delivery and high-quality…

CPM Construction plans to buy a truck for $150,000, andsell it for $15,000 at the end of five years. The annual operatingcost of the vehicle is $60,000. What is the equivalentannual cost of this truck, if the company uses a MARR of12%?

Find the effective gross hourly cost for drill press operators paid an average wage of $22/hour. No overtime is planned. Company policy allows six paid holidays and the average entitled vacation is 10 days. There is no nonchargeable time or performance subsidy. No sick leaves are included. FICA is at 6.2% and worker’s compensation is at 2% of $20,000. The company pays $400 for unemployment insurance.