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- A company has $100,000 to spend on the various projects listed. Using these projects only, what should this company consider its minimum attractive rate of return to be? project investment required ($) expected return (%) ABCDEFG I 10,000 25,000 50,000 40,000 25,000 30,000 20,000 14 10 12 16 11 10 12A university is trying to determine how much it should charge for tickets to basketball games to help offset the expenses of the new arena. The cost to build the arena including labor, materials. e tc. was $92 million. Each year the maintenance cost is expected to increase by 5% as the building gets older. 1l1e maintenance cost for the first year is $150.000. Utilities arc expected to average about $200.000 per year and labor costs $300,000. The average attendance at basketball games over the year is expected to be J00.000 people (or 100.000 tickets sold to events). Assuming the arena has no other source of income besides regular ticket sales (not including student tickets) for basketball games, what should the university charge so that it can recover at least a 6% cost of borrowing on its investment? ll1c university expects the arena to be used for 40 years and 10 have no appreciable salvage value.With respect to the graph below, if the MARR for this particular scenario were 2%, which altemative should be selected based solely on incremental analysis? Estimated Response Time for Awarage Student <1 minuto) BUDDO 4, 3,000 2.000 4,000 IMA N INDOTONT a. The High Cost Altemative b. The Low Cost Altemative c. The Increment d. The Do Nothing Alternative e. All of the Above TAL www -Highl Lara Irrrem
- 2-17 Consider the accompanying breakeven graph for an investment, and answer the following questions. $40 $35 $30 Total Revenue $25 $20- Total Cost $15 $10 -- $5 $0 0. 250 500 750 1000 1250 1500 1750 Output (units/year) (a) Give the equation for total revenue for x units per year. (b) Give the equation for total costs for x units per year. (c) What is the "breakeven" level of x? :11 ou hove a Dollars (X104)1.A company have to choose the type of electrical generator to sustain its production operation in case of power failures. Type A Type B First Cost P200,000 P300,000 Annual Operations Cost P 32,000 P 24,000 Annual Labor Cost P 50,000 P 32,000 Insurance & Taxes 3% of First Cost 3% of First Cost Payroll taxes 4% of first Cost 4% of first Cost Estimated Life 10 yrs 10 yrs Note: All the Types of Genset will depreciate. If the minimum required rate of return is 15%, which type of genset should be selected? Using Present Worth Method, which type should be selected?Consider these two alternatives.Alternative A Alternative BCapital investment OMR 6000 7500Annual revenues OMR 1800 2250Annual expenses OMR 500 750Estimated market valueOMR1200 1600Useful life 10 10MARR 12% 1. Recommend which alternative should be selected.2. How much capital investment of the expensive alternative have to vary so that theinitial decision would be reversed.
- BASED ON ESTIMATES THE DATA FOR TWO TYPES OF BRIDGES WITH DIFFERENT LIVES ARE AS FOLLOWS. IFTHE MINIMUM RATE OF RETURN IS 9%, DETERMINE W/C PROJECT IS MORE DESIRABLE. TIMBER BRIDGE STEEL BRIDGEFIRST COST P 50,000.00 P 140,000.00SALVAGE VALUE 2,000.00 10,000.00LIFE IN YEARS 12 36ANNUAL MAINTENANCE 6,000.00 2,500.00EVALUATE USING:A.) THE ANNUAL COST METHODB.) PRESENT WORTH COST METHODC.) RATE OF RETURN METHODPART 2 - с PROBLEM SOLVING PROBLEM NO.2 Compute the FW: $3500 market value productivity attributable to equipment për year (Opērating costs have already been deducted from the revenue) $8500 $8500 $8500 $8500 $8500 1 2 3 5 End of Year i= 25%/yr $23500 investment costPART 2 - C PROBLEM SOLVING PROBLEM NO.1 Compute the PW: $3500 market value productivity attributable to equipment per year (Operating costs have already been deducted fron the revenue) $8500 $8500 $8500 $8500 $8500 1 2 3 End of Year i= 18%/yr $23500 investment cost 5.
- One company announced profits of 175000€ for year 1, 180,000€ for year 2, 190,000€ for year 3. The percentage change in net earnings from year 1 to year 3 is calculated as: a. 15000/175000 b. 25,000/175,000 c. 10,000/190,000 d. 25,000/190,000 e. None of the aboveThe estimates for a project appear in the following table: Dear optimistic most likely pessimist Fixed cost($) 250,000 250,000 250,000 Annual profit ($) 20,000 15,000 8,000 Shelf life(years) 30 30 30 Residual value($) 000 to. Use the range of values to calculate the heavy average of benefits. b. Using the heavy average, calculate the Equivalent Average Present Value for this project. Use a MARR of 10%. Heavy average annual benefits =$ ; Average Present Value = $stion 5 O out of 11 $500 $S00 5500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 Compute P. 2 5 10 11 12 50 i = 10% estion 6 O out of 10 S500 E= ? 10 $500 $500 $500 Compute F10= 10 11 12 13 i-10% 10 out of 10 uestion 7