A project will cost $50,000. the benefits at the end of the first year are estimated to be $10,000, increasing $1000 per year in subsequent years. assume a 12% interest rate, no salvage value, and an eight-year analysis period. what is the benefit-cost ratio?
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Question: 1. What is the capitalized value of an infinite series of $1,000 biennial (every two years) payme...
1. What is the capitalized value of an infinite series of $1,000 biennial (every two years) payments? MARR = 10%
$4,950
$4,025
.
$4,350
$4,762
2. Frank West Enterpises would like to choose one of the following plans for expansion. Using present worth analysis, find the best alternative among the three alternatives and the Do-Nothing.
Alt. A
Alt. B
Alt. C
Initial Cost
$10,000
$21,000
$8,000
EUAB
$6,000
$7,000
$4,000
EUAC
$1,500
$1,000
$2,000
Salvage Value
$2,000
$8,000
$3,000
Life
2 Years
3 Years
2 Years
Use a MARR of 10%.
.
Do-Nothing
.
Alt. C
.
Alt. B
.
Alt. A
3.
U. S. Engineering is investigating the possibility of acquiring new automated packaging equipment at a cost of $12,000. It is expected that the equipment will have a salvage value of $1,000 at the end of its useful life of 10 years. It is determined by the plant engineering department at the company that the operation and maintenance cost will be $500 in the first year and will gradually increase every year starting year 2 at the rate of $50 until the equipment is retired. Determine the equivalent uniform annual cost (EUAC) if MARR for the company is 10%.
$2,575.95
$2,150.50
.
$2,176.60
.
$2,184.40
4.
The cash flows given in table below are for two different alternatives. MARR =10%
Data
C
D
Initial Cost
$20,000
$80,000
Uniform Annual Benefits
$6,000
$10,000
Salvage Value
$5,000
$20,000
Useful Life in years
5
infinity
The equivalent uniform annual worth (EUAW) of alternative N is ______________.
Hint: Assume the Salvage Value is never realized since N is infinite.
$2,000
$1,920
$1,762
$2,476
5.
Compare the following plans using a MARR of 6%.
Data
Plan X
Plan Y
Equipment First Cost
$50,000
$75,000
Annual Operation & Maintenance Cost
$3,000
$2,500
Salvage Value
$10,000
$0
Service Life, Years)
25
50
$6,728; $7,255
$7,255; $9,000
.
$6,728; $7,728
.
$6,728; $8,200
6.
LAEP, Inc. wants to evaluate two methods of shipping their products. The following cash flows are associated with each alternative:
Data
Method
A
B
Life (Years)
10
10
First Cost
$700,000
$1,512,000
M&O Cost
$18,000
$9,000
M&O Cost Gradient
$900
$775
Annual Benefit
$154,000
$303,000
Salvage Value
$142,000
$210,000
Annual profits are based on amount of products which can ordinarily be shipped each year as a function of the amount of vehicles or service purchased with the first cost and the M&O costs.
Using a MARR of 15%, calculate the equivalent uniform annual cash flow (EUAB - EUAC) for each alternative.
Determine the most desirable alternative based on the results.
$389.57, $445.90; Method A
$445.90, $389.57; Method A
.
$445.90, $389.57; Method B
.
$389.57, $445.90; Method B
7.
For the cash flow diagram shown, which of the following equations properly calculates the uniform equivalent (A)?
n
0
3
6
9
12
15
Dollars
$100
$100
$100
$100
$100
$100
A=100(A/P,I,15)+ 100(A/F,I,3)
A=100(A/P,I,15)
A=100(A/F,I,3) + 100(A/F,I,15)
A=100(A/P,I,3) + 100(A/F,I,3)
8.
Three different alternatives shown in table below are being considered by U. S. Engineering systems.
Assume that alternatives X and Z are replaced at the end of their lives.
Data
Alternative X
Alternative Y
Alternative Z
Initial Cost
$6,000
$1,000
$1,500
Uniform Annual Benefits
$810
$125
$ 230
Useful Life in Years
20
infinite
10
MARR
12%
The NPW for alternative
1. What is the capitalized value of an infinite series of $1,000 biennial (every two years) payments? MARR = 10%
$4,950
$4,025
.
$4,350
$4,762
2. Frank West Enterpises would like to choose one of the following plans for expansion. Using present worth analysis, find the best alternative among the three alternatives and the Do-Nothing.
Alt. A
Alt. B
Alt. C
Initial Cost
$10,000
$21,000
$8,000
EUAB
$6,000
$7,000
$4,000
EUAC
$1,500
$1,000
$2,000
Salvage Value
$2,000
$8,000
$3,000
Life
2 Years
3 Years
2 Years
Use a MARR of 10%.
.
Do-Nothing
.
Alt. C
.
Alt. B
.
Alt. A
3.
U. S. Engineering is investigating the possibility of acquiring new automated packaging equipment at a cost of $12,000. It is expected that the equipment will have a salvage value of $1,000 at the end of its useful life of 10 years. It is determined by the plant engineering department at the company that the operation and maintenance cost will be $500 in the first year and will gradually increase every year starting year 2 at the rate of $50 until the equipment is retired. Determine the equivalent uniform annual cost (EUAC) if MARR for the company is 10%.
$2,575.95
$2,150.50
.
$2,176.60
.
$2,184.40
4.
The cash flows given in table below are for two different alternatives. MARR =10%
Data
C
D
Initial Cost
$20,000
$80,000
Uniform Annual Benefits
$6,000
$10,000
Salvage Value
$5,000
$20,000
Useful Life in years
5
infinity
The equivalent uniform annual worth (EUAW) of alternative N is ______________.
Hint: Assume the Salvage Value is never realized since N is infinite.
$2,000
$1,920
$1,762
$2,476
5.
Compare the following plans using a MARR of 6%.
Data
Plan X
Plan Y
Equipment First Cost
$50,000
$75,000
Annual Operation & Maintenance Cost
$3,000
$2,500
Salvage Value
$10,000
$0
Service Life, Years)
25
50
$6,728; $7,255
$7,255; $9,000
.
$6,728; $7,728
.
$6,728; $8,200
6.
LAEP, Inc. wants to evaluate two methods of shipping their products. The following cash flows are associated with each alternative:
Data
Method
A
B
Life (Years)
10
10
First Cost
$700,000
$1,512,000
M&O Cost
$18,000
$9,000
M&O Cost Gradient
$900
$775
Annual Benefit
$154,000
$303,000
Salvage Value
$142,000
$210,000
Annual profits are based on amount of products which can ordinarily be shipped each year as a function of the amount of vehicles or service purchased with the first cost and the M&O costs.
Using a MARR of 15%, calculate the equivalent uniform annual cash flow (EUAB - EUAC) for each alternative.
Determine the most desirable alternative based on the results.
$389.57, $445.90; Method A
$445.90, $389.57; Method A
.
$445.90, $389.57; Method B
.
$389.57, $445.90; Method B
7.
For the cash flow diagram shown, which of the following equations properly calculates the uniform equivalent (A)?
n
0
3
6
9
12
15
Dollars
$100
$100
$100
$100
$100
$100
A=100(A/P,I,15)+ 100(A/F,I,3)
A=100(A/P,I,15)
A=100(A/F,I,3) + 100(A/F,I,15)
A=100(A/P,I,3) + 100(A/F,I,3)
8.
Three different alternatives shown in table below are being considered by U. S. Engineering systems.
Assume that alternatives X and Z are replaced at the end of their lives.
Data
Alternative X
Alternative Y
Alternative Z
Initial Cost
$6,000
$1,000
$1,500
Uniform Annual Benefits
$810
$125
$ 230
Useful Life in Years
20
infinite
10
MARR
12%
The NPW for alternative
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