Decision D4, which has three possible alternatives-x, y, or z-must be made in year 3 of...
Decision D4, which has three possible alternatives-x, y, or z-must be made in year 3 of a 6-year study period in order to maximize the expected value of present worth. Using a rate of return of 15% per year, the investment required in year 3, and the estimated cash flows for years 4 through 6, determine which decision should be made in year 3. (This decision node is part of a larger tree.)
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Decision D4, which has three possible alternatives-x, y, or
z-must be made in year 3 of...
A firm is considering three possible one-year investments, which we will name X, Y, and Z....
A firm is considering three possible one-year investments, which we will name X, Y, and Z. • Investment X would cost $10 million now and would return $11 million next year, for a net gain of $1 million. • Investment Y would cost $100 million now and would return $105 million next year, for a net gain of $5 million. • Investment Z would cost $1 million now and would return $1.2 million next year, for a...
Three mutually exclusive investment alternatives are being considered. The estimated cash flows for each wernative we...
Three mutually exclusive investment alternatives are being considered. The estimated cash flows for each wernative we given below. The study period is 30 years and the firm's MARR is 6% per year. Assume repeatability and reinvestment of positive cash balances at 6 per year a. What is the simple payback period for Alternative 1? b. What is the annual worth of Alternative 2? c. What is the IRR of the incremental cash flows of Alternative 2 compared to Aheative 1?...
Compare alternatives A and B with the present worth method if the MARR is 11% per year. Which one would you recommend? Assume repeatability and a study period of 12 years. $25,000 $10,000 at end of y...
Compare alternatives A and B with the present worth method if the MARR is 11% per year. Which one would you recommend? Assume repeatability and a study period of 12 years. $25,000 $10,000 at end of year 1 and increasing by $1,000 per year thereafter None Capital Investment Operating Costs $55,000 $5,000 at end of year 1 and increasing by $500 per year thereafter $5,000 every 3 years 12 years $10,000 if just overhauled Overhaul Costs Life 6 years negligible...
Assumptions 1. The decision to invest in the Mark II must be made after three years,...
Assumptions 1. The decision to invest in the Mark II must be made after three years, in 1985. 2. The Mark II has an investment requirement of $1,000 million, which is taken as fixed. 3. Forecasted cash inflows of the Mark II have a present value in 1985 of $907 million and $525 (907 / 1.23 = 525) million in 1982. 4. The future value of the Mark II cash flows is highly uncertain. This value evolves as a stock...
A city in the Midwest has made a decision to expand the electricity production in its...
A city in the Midwest has made a decision to expand the electricity production in its area by building a new power plant. The city government must decide whether the plant will be powered by coal or whether the plant will be built on a river and use hydropower. The planning horizon is 40 years, and the assumed cost of capital is 7%. Compute a conventional B/C ratio, using AW, with disbenefits in the numerator for each of the two...
1. When evaluating multiple alternatives or projects, against what must they be compared, if they are...
1. When evaluating multiple alternatives or projects, against what must they be compared, if they are (a) independent, and (b) mutually exclusive? (5 pts) 2. Define the term capitalized cost and give a real-world example of something that might be analyzed using a capitalized cost evaluation technique. (5 pts) 3. After you have conducted a future worth comparison of alternatives, what do you multiply the FW values by in order to obtain the AW values of the alternatives? (5 pts)...
The cash flow for two alternatives is shown in the table below. a) Determine which alternative...
The cash flow for two alternatives is shown in the table below. a) Determine which alternative should be selected based on present worth comparison (use i=10%). b) If your analysis period (study period) is just 3 years, what should be the salvage value of alternative A2 at the end of year 3 to make the two alternatives economically indifferent? A1 Year 0 -900 -400 A2 -1800 -300 -300 1 2 -400 3 -400+200 -300 4 5 6 -300 -300 -300...
An investment, which is worth 30,300 dollars and has an expected return of 7.42 percent, is...
An investment, which is worth 30,300 dollars and has an expected return of 7.42 percent, is expected to pay fixed annual cash flows forever with the next annual cash flow expected in 1 year. What is the present value of the annual cash flow that is expected in 7 years from today? Quantum Pizza took out a loan from the bank today for 24,500 dollars. The loan requires Quantum Pizza to make a special payment of 13,500 dollars to the...
office in Ontario is considering buying a 3-D printing machine. The office is choosing hetween two...
office in Ontario is considering buying a 3-D printing machine. The office is choosing hetween two 3-D printing inachines that use Fused Deposition Modeling (FDM) technology. The office has a MARR (Minimum Acceptable Rate of Return) of 7%. The salvage value for both machines at the end of their service lives is expected to he $400. Use the information in the table below to answer the following questions Price Running cost per year Maintenance cost Machine A S6,400 $1,200 $600...
i want a hand written solution if possible. thanks! Two mutually exclusive alternatives are being considered...
i want a hand written solution if possible. thanks!
Two mutually exclusive alternatives are being considered for the environmental protection equipment at a petroleum refinery. One of these alternatives must be selected. a. Which environmental protection equipment alternative should be selected? The firm's MARR is 20% per year. Assume the equipment will be needed indefinitely. Assume repeatability is appropriate for this comparison. b. Assume the study period is shortened to five years. The market value of Alternative B after five...
Three mutually exclusive investment alternatives are being considered. The estimated cash flows for each wernative we given below. The study period is 30 years and the firm's MARR is 6% per year. Assume repeatability and reinvestment of positive cash balances at 6 per year a. What is the simple payback period for Alternative 1? b. What is the annual worth of Alternative 2? c. What is the IRR of the incremental cash flows of Alternative 2 compared to Aheative 1?...
Compare alternatives A and B with the present worth method if the MARR is 11% per year. Which one would you recommend? Assume repeatability and a study period of 12 years. $25,000 $10,000 at end of year 1 and increasing by $1,000 per year thereafter None Capital Investment Operating Costs $55,000 $5,000 at end of year 1 and increasing by $500 per year thereafter $5,000 every 3 years 12 years $10,000 if just overhauled Overhaul Costs Life 6 years negligible...
1. When evaluating multiple alternatives or projects, against what must they be compared, if they are (a) independent, and (b) mutually exclusive? (5 pts) 2. Define the term capitalized cost and give a real-world example of something that might be analyzed using a capitalized cost evaluation technique. (5 pts) 3. After you have conducted a future worth comparison of alternatives, what do you multiply the FW values by in order to obtain the AW values of the alternatives? (5 pts)...
The cash flow for two alternatives is shown in the table below. a) Determine which alternative should be selected based on present worth comparison (use i=10%). b) If your analysis period (study period) is just 3 years, what should be the salvage value of alternative A2 at the end of year 3 to make the two alternatives economically indifferent? A1 Year 0 -900 -400 A2 -1800 -300 -300 1 2 -400 3 -400+200 -300 4 5 6 -300 -300 -300...
office in Ontario is considering buying a 3-D printing machine. The office is choosing hetween two 3-D printing inachines that use Fused Deposition Modeling (FDM) technology. The office has a MARR (Minimum Acceptable Rate of Return) of 7%. The salvage value for both machines at the end of their service lives is expected to he $400. Use the information in the table below to answer the following questions Price Running cost per year Maintenance cost Machine A S6,400 $1,200 $600...
i want a hand written solution if possible. thanks!
Two mutually exclusive alternatives are being considered for the environmental protection equipment at a petroleum refinery. One of these alternatives must be selected. a. Which environmental protection equipment alternative should be selected? The firm's MARR is 20% per year. Assume the equipment will be needed indefinitely. Assume repeatability is appropriate for this comparison. b. Assume the study period is shortened to five years. The market value of Alternative B after five...
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