Reference no: EM131093156
The government is considering purchasing some excavating equipment. It has a first cost of $65,000, will result in annual savings to the public of $20,000 per year, and will be sold for $15,000 at the end of its useful life. The useful life is 5 years, and the MARR is 6%.
a. Determine the benefits to cost (B/C) ratio for this situation. Should the government invest in the excavating equipment?
b. An intern working with the company came across some alternative equipment that has a first cost of $85,000, will result in a savings to the public of $25,000 per year, and will be sold for $20,000 at the end of its useful life, which is also 5 years. Using the incremental B/C analysis procedure, and the results from “a”, determine if it’s economically sound for the company to invest in the more expensive equipment at a MARR of 6%.
c. For the data in parts a and b, use the Incremental Internal Rate of Return (IRR) procedure to determine which equipment (if any) should be chosen. Assume a MARR of 6% (you can use Excel for this portion- please upload your file to Moodle, or email it to me). Record your results here, and briefly explain your conclusion.
d. For the data in parts a and b, construct a choice table, for values for i from 0 to 100%, and graph the results. Based on these results, and a MARR of 6%, which alternative should be chosen? Would your decision change if your MARR was 15%? What if your MARR was 50%? (you can use Excel for this portion- please upload your file to Moodle, or email it to me). Record your results here, and briefly explain your conclusion.
|
A binomial distribution with parameters
: We have seen that if Y has a binomial distribution with parameters n and p, then Y/n is an unbiased estimatorofp.To estimate the variance of Y,we generally usen(Y/n)(1-Y/n).
|
|
Bond stipulates fixed nominal interest rate
: A bond has a face value of $8000. The bond stipulates a fixed nominal interest rate of 8% per year, paid every 3 months, over its 10 year life. If you were to buy this bond at a price of $7500, determine your quarterly IRR, your nominal rate of retur..
|
|
Write a research on evaluation of education system
: Write a Research on evaluation of education system Literature review Analyzing the problem
|
|
Create a graph that illustrates your data
: Create a graph that illustrates your data. This may be a pie or bar graph or may be a histogram or box plot, depending on the nature of your data.
|
|
Should the government invest in the excavating equipment
: The government is considering purchasing some excavating equipment. It has a first cost of $65,000, will result in annual savings to the public of $20,000 per year, and will be sold for $15,000 at the end of its useful life. The useful life is 5 year..
|
|
Capital account inflow or capital account outflow
: Each of the following events will result in either an import or export to be recorded in the current account or the capital account of Vidinland, an imaginary small country in eastern Europe. For each one, say whether it will be a current account imp..
|
|
The price elasticity of demand for movie theatres
: Assume that the price elasticity of demand for movie theatres is -0.85 during all evening shows but for all afternoon shows the price elasticity of demand is -2.28. For the theater to maximize total revenue, it should..... Explain why.
|
|
Discrimination to sell cologne under two different lables
: A firm uses third-degree price discrimination to sell the same cologne under two different labels. The price elasticity of demand for `High Class' is -1.25. The price elasticity of demand for `Splash-This-Stuff-On' is -2. Which one of the following s..
|
|
Detailed analysis of sun pharma and ranbaxy merger
: Lay down a detailed analysis of Sun Pharma and Ranbaxy Merger.Provide introduction of Sun Pharma and Ranbaxy
|