Alternative A Alternative B Alternative C $75,000 $20,435 $75,000 $16,212 $100,000 $22,675 Initial Investment Net Annual Revenues Market Value at $15,000 $12,000 $25,000 End of Useful Life Useful Life 5 years 6 years 10 years
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- Your company is considering the introduction ofa new product line. The initial investment required forthis project is $500,000, and annual maintenance costsare anticipated to be $45,000. Annual operating costswill be directly proportional to the level of productionat $8.50 per unit, and each unit of product can be soldfor $65. If the MARR is 15% and the project has a life of5 years, what is the minimum annual production levelfor which the project is economically viable? With Cash Flow Thank YouYou are the boss of a consulting firm. One of your clients has brought to you a new project. The client s asking for an initial investment of $35,000. The project will return $5,000 for the next 4 years. If the company has a MARR set at 12%, what method would you use to evaluate this project? O Present Worth Method O Annual Worth Method O Future Worth Method O Internal Return Rate O External Return Rate question 2 you are a consultant at Brinkley & co .you are responsible for evaluating projects introduced by surrounding engineering firms. the current project you are evaluating requires an initial investment of $35,000 and that returns $5000 for the next 1O years. if the MARR is 12% what is this a good investment?You are the boss of a consulting firm. One of your clients has brought to you a new project. The client s asking for an initial investment of $35,000. The project will return $5,000 for the next 4 years. If the company has a MARR set at 12%, what method would you use to evaluate this project? O Present Worth Method O Annual Worth Method O Future Worth Method O Internal Return Rate O External Return Rate
- Assume you started a sideline business in commercial photography last year using your then-owned equipment. Due to excellent success, you plan to purchase new equipment and upgrade your studio facility. First cost of equipment, $ Annual expenses, $ per year Annual revenue, $ per year |-160,000 |-45.000 75,000 Determine the no-return payback period. The no-return payback period is | years.1. You bought the latest IPhone 13 for your online selling business for Php 83,000.00. With this, your online income has increased by Php 1,000.00 anually. After 7 years, your Iphone 13 can be sold at Php 13,000.00. You have set your personal MARR to be at 8%. Was your purchase of the Iphone 13 economically viable? Show complete solution using Present Worth Method, Annual Worth Method, and Future Worth Method and with cashflow diagram. 2. Using the previous problem and using External Rate of Return Method, what should your MARR be so that you would have a breakeven? Is it even economically viable? 3. Using the previous problem and using Internal Rate of Return Method, at what value should the phone be bought so that you would have a breakeven?P 5 5 S 2 10 20 30 A 40 8⁰ ·So + Soc. = MC + Soc. 5o= MC 60 Do = MB 70 80 38
- A company is considering purchasing either machine A or B, given that MARR is 10%, and the company projected sales is 40,000 units. Machine A Machine B $90,000 $39,000 $1100 +.02xunits $600 +0.03xunits Initial cost $70,000 $40,000 $1000+0.03xunit $500+0.05xunit 8 years $15,000 Annual revenues Annual Operation cost Annual Maintenance cost 6 years $10,000 Life span Salvage value Draw the cash fiow diagram for each machine. a. b. Compute ERR for each machine, based on computed ERRS, which machine is to be selected7 Explain the difference between the IRR & ERR methods as explained in the lecture.Determine the net present worth (NPW) of the cash flows given in table below for an investment opportunity being presented to a company. MARR =12% Year 0 1-10 11-15 16-25 26-30 Cash Flow -$100K 10K 20K -5K 30K Group of answer choices $90,030 $80,914 $72,916 $112,200Retainer 0 1 Expenses 2 Revenue N Years How much can you afford to spend on the first year expenses on a project with the above cash flow?, given; Your MARR is 10.00%, the client has given you a retainer of $5,700, annual revenues are expected to be $2,750, the external rate of return required for this project is 19.5% and the entire project will last 8 years. (Round your answer to the nearest penny)
- Question 3 A project with the following costs are under consideration to determine its profitability. Using the IRR comparison, and an annual MARR of 10% compounded semiannually, determine if the project should be executed First cost $45,000 Semiannual operating cost $10,000 Semiannual income $20,000 Salvage value $20,000 Life in years 4 years Oa. IRR = 17% semiannual Ob. IRR= 18.7% semiannual O IRR = 16.9% semiannual Od. IRR 15.3% semiannualMenkin’s Tools produces low-cost steel tools. One of their most popular tools is a steel wrench that comes in three sizes. Each of the three wrenches is forged in hydraulic presses. Data for the forging presses are given below? FC VC SP A $ 200,000 $ 6.00 $ 20.00 B $ 150,000 $ 4.50 $ 18.00 C $ 275,000 $ 3.25 $ 15.00 What is the breakeven point (in units) for Press A? 10,657 11,111 12,432 14,286 What is the breakeven point (in units) for Press B? 10,657 11,111 12,432 13,346 What is the breakeven point (in units) for Press C? 14,896 18,865 20,960 23,4045. Annual costs of 3 different systems is provided below (the negative number implies a cost). If the MARR is 8%, which system is the most economical of the three? Provide numerical justification. n 2 3 6 0 1 4 5 7 System A 0 -$4,000,000 -$4,000,000 -$4,000,000 -$4,000,000 -$4,000,000 -$4,000,000 -$4,000,000 System B -$2,000,000 -$3,800,000 -$3,800,000 -$3,800,000 -$3,800,000 -$3,800,000 -$3,800,000 -$3,800,000 System C -$4,000,000 -$1,900,000 -$1,900,000 -$1,900,000 -$1,900,000 -$1,900,000 -$1,900,000 -$1,900,000