File Preview 2. The cash flows from a contemplated project are assumed to have a Beta distribution with following estimated values: EOY 0 Pessimistic, Yp S-14,000 1 0 2 5,000 3 8,000 Most likely $-12,000 2,000 8,000 12,000 Optimistic, Yo $-10,000 4,000 11,000 16,000 (a) Calculate the means and standard deviations of the cash flow for each year. (b) Assume MARR-15%, find the the mean and standard deviation of the net present value. (Assume the cash flows are completely independent.)
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- From the decision tree branch shown, determine the expected values of the two outcomes if decision D3 is already selected and the maximum outcome value is sought. (This decision branch is part of a larger tree.) Probability 0.4 03 0.3 0.3 0.6 When the probability is 0.4, the value is $60. When the probability is 0.3, the value is $-27. When the probability is 0.3, the value is $20. When the probability is 0.6, the value is $-11. When the probability is 0.4, the value is $6.2. 0.4 The expected value of the the top node is $ The expected value of the bottom node is $[A company is evaluating 3 different distribution plans for a new product. The company has developed best case (60% probability) and worst case (40% probability) estimates for each plan. Results are summarized in the table below. What is the optimal decision based on the maximum expected value criterion? Worst Best Plan 1 -2 10 Plan 2 3 6 Plan 3 4 5 Prob 0.4 0.6Which decision rule is most concerned with downside risk? A) Expected monetary value B) Maximax C) Maximin D) None of the above
- In the design of a jet engine part, the designer has a choice ofspecifying either an aluminium alloy casting or a steel casting. Either materialwill provide equal service, but the aluminium casting will weigh 1.2 kg ascompared with 1.35 kg for the steel casting.The aluminium can be cast for $. 80.00 per kg. and the steel one for$ 35.00 per kg. The cost of machining per unit is $. 150.00 for aluminiumand $. 170.00 for steel. Every kilogram of excess weight is associated witha penalty of $. 1,300 due to increased fuel consumption. Cost of using aluminium metal for the jet engine part?Mother E, a business selling specialized helmet, has a carrying cost of P70 per unit per order. In order to satisfy the customers coming from various places, they order every 4 months. The stockout cost is P50 per unit per year. The following are the demand for specialized helmet Demand during lead time Probability 50 .1 60 .2 70 .2 80 .2 90 .1 The reorder point is 70 units. What level of safety stock should be maintained?A firm hasi nitial value V and has an investment opportunity costing 400 that will yield it an endpoint value of V +500 but it has to issue new shares to raise the required 400. Initially its owners own 10 shares that are currently selling at a market price of 80 per share. Note that this price may not necessarily reflect the true value per share– only the firm itself knows this. If it is indifferent between issuing and not issuing at the market price of 80, what is the initial true value of the firm V?
- If company A manufactures t-shirts and sells them to retailers for US$9.80 each. It has fixed costs of $2625 related to the production of the t-shirts, and the production cost per unit is US$2.30. Company B also manufactures t-shirts and selll them directly to consumers. The demand for its product is p = 15– 125 its production cost per unit is US$5.00 and its fixed cost are the same as for company A. (i) Derive the total revenue function, R(x) for company A. (ii) Derive the total cost function, C(x) for company A. (iii) Derive the profit function, II(x) for company A. (iv) Using a spreadsheet, create a table for showing x, R(x),, C(x) for company A in the domain x = 50, 100, 150, 200, 250, 300, 350, 400, 450. (v) Graph the functions from (d) above on the same axes. (vi) From your graph, determine the break-even level of output for company A. (vii) Derive the total revenue function, R(x) for company B. (viii) Derive the profit function, II(x) for company B. (ix) How many t-shirts must…The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. The selling price for the product will be $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are estimated as follows: Procurement Cost($) 10 $ 11 12 Probability 0.25 0.45 0.30 Labor Cost ($) 20 22 24 25 Probability 0.10 0.25 0.35 0.30 Transportation Cost ($) 3 5 (a) Compute profit per unit for the base-case, worst-case, and best-case scenarios. Base Case using most likely costs Profit = $ /unit Worst Case Profit = $ /unit Best Case Profit = $ /unit Probability 0.75 0.25 (b) Construct a simulation model to estimate the mean profit per unit. (Use at least 1,000 trials.) (c) Why is the simulation approach to risk analysis preferable to generating a variety of what-if scenarios? Simulation will provide ---Select--- of the profit per unit values which can then be used to find ---Select--- ◆ of an unacceptably low…Auria will produce a venicle component and knows that each start generates a cost of 5,000 pesos. Its production capacity is 150,000 units and the cost per unit is $ 200, tne annual demand is 100,000 units, and the inventory rate is 15% per month. Consider that the product allows shortages and the cost of goodwill loss is $ 0.3 for each unit of said items, while the penalty cost if they do not deliver is S 30 / unit / year. a) Calculate the total annual cost and the quantity Q required.
- (a) Q1: Examine the data in the Table below and determine the lifetimecosts of this hybrid vehicle. b) As logistics manager, you’re considering the following alternativevehicle for your fleet. What are its lifetime costs in comparison withthe hybrid vehicle? c) Calculate the indifference point between the two vehicle designsand the expected age of the vehicles at this point. d) Which car should you choose if you intend to own it for longer thanthis time?Chemitronix Ltd. is a microchips manufacturing company. It was found that the business is at the maturity stage, demanding some change. After rigorous research, management came up with the following decision variables.Expansion: 45% chance of gaining 1,500,00; 55% chance of losing XNew Product: 50% chance of gaining 900,000; 50% chance of losing 539740What must have been the value of expansion loss if expansion and new product will result to the same expected monetary values?A European consortium has spent a considerable amount of time andmoney developing a new supersonic aircraft. The aircraft gets high markson all performance measures except noise. In fact, because of the noise,the consortium’s management is concerned that the U.S. government mayimpose restrictions on some of the American airports where the aircraftcan land. Management judges a 50–50 chance that there will be somerestrictions. Without restrictions, management estimates its (presentdiscounted) profit at $125 million; with restrictions, its profit would beonly $25 million. Management must decide now, before knowing thegovernment’s decision, whether to redesign parts of the aircraft to solvethe noise problem. The cost of the redesign program is $25 million. Thereis a .6 chance that the redesign program will solve the noise problem (inwhich case, full landing rights are a certainty) and a .4 chance it will fail. Using a decision tree, determine the consortium’s best course ofaction, assuming…