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- In order to carry a new investment project, company A has to purchase a machine for OMR 400,000. Company A staff have enough capacity to carry out the production, no one new will need to be hired, they are currently paid OMR 20,000. Calculate the relevant cost? a. OMR 20,000 Ob. OMR 380,000 O c. OMR 400,000 d. OMR 420,000Three alternatives have the following cost data associated with them: Data Alt. 1 Alt. 2 Alt. 3 Useful Life, Years 10 10 10 First Cost $1,325,000 $1,980,000 $1,650,000 Annual Benefit 265,000 589,000 435,000 Annual M&O Costs 95,000 97,000 91,000 Annual M&O Gradient 2,300 2,100 1,980 Salvage Value 145,000 205,000 178,000 Loan Payment 150,946 225,565 187,971 The loan payments are calculated using an interest rate of 10%, a life equal to the life of the machine, and a down payment of 30%. Use a MARR of 12% and determine which machine, if any, should be purchased. Use incremental analysis.Three alternatives have the following cost data associated with them: Data Alt. 1 Alt. 2 Alt. 3 Useful Life, Years 10 10 10 First Cost $1,125,000 $1,980,000 $1,650,000 Annual Benefit 265,000 589,000 435,000 Annual M&O Costs 95,000 97,000 91,000 Salvage Value 145,000 205,000 178,000 Determine whích machine is better to purchase, if i = 10%. 1. Use a B/C 2. Use a Payback Period
- Reference: Case Study S Dunn Manufacturing is considering the following two alternatives. The cost information for the two proposals for replacing an equipment are provided are in table below. Initial cost Benefits/year Machine X $120,000 $20,000 for the first 10 years and $9,000 for the next 10 years Life Salvage value $40,000 MARR 5.2. The NPW of machine X is A) $35,158 B) $48,192 C) $50,752 Machine Y $96,000 $12,000 per year for 20 years. 20 years 8% $20,000Should WMM lease or construct their own production facility Option 1: Construct Costs to incur: Actual expenditure towards buying land, construct building and getting ready for use $ 500,000Taxes, insurance, and repairs (per year) $ 20,000Intended years of use 18Projected market value in 18 years $ 1,000,000 Budgeted maximum expenditure towards buying land, construction of building and getting ready for use. $ 500,000Remainder in four payments of; $ 175,000Option 2: LeaseIntended years of use 18First lease payment due now $ 100,000Rest of the lease payments…Problem 2: Alternatives for constructing a new facility which are mutually exclusive are being considered. The annual equivalènt costs and estimated benefits of the alternatives are as follows: Alternative Cost Benefits $1,050,000 $900,000 $1,230,000 $1,350,000 $990,000 $1,110,000 $810,000 $1,390,000 $1,500,000 $1,140,000 A C D E Using the B-C ratio, which alternative, if any, should be adopted for investment?
- heavy equipment for a certain project and the details are as follows: ITEM: MACHINE A: MACHINE B: First Cost P2,000,000.00 P3,000,000.00 Annual operating P325,000.00 P250,000.00 cost Annual labor cost Insurance and taxes Payroll taxes Estimated life P500,000.00 P320,000.00 4% 10% 12 yrs. 4% 10% 12 yrs. If the minimum ROR is 25%, What is the annual cost of Machine A & B using present worth method?Given the two machines’ data Machine A Machine B First Cost P8,000.00 P14,000.00 Salvage value 0 2,000.00 Annual operation 3,000.00 2,400.00 Annual maintenance 1,200.00 1,000.00 Taxes and insurance 3% 3% Life, years 10 15 Money is worth at least 16% Using equivalent uniform annual cost method, determine the value of alternative A and alternative B:Calculate for the cost of site clean-up if the total duration of the project is 18 months. The estimated number of trips per week is 3 truck loads of site rubbish and debris with a cost of Php 3,200.00 per trip. Php 9,600.00 Php 19,200.00 Php 345,000 Php 691,200.00
- RLC Manufacturing is planning to purchase a cutting equipment. Information are as follows: Equipment 1 Equipment 2 First Cost P 12,000 P 18,000 Salvage Value P 600 P 2,000 Annual Operation P 3,200 P 2,500 Annual Maintenance P 1,200 P 1,000 Taxes & Insurance 3% 3% Life, years 10 15 Money is worth at least 16%. Which equipment should be selected? Use: Annual Cost MethodTwo alternatives, code-named X and Y, are under consideration at Afalava Corporation. Costs associated with the alternatives are listed below. Alternative N Alternative Y $37,000 $37,000 Materials costs............ Processing costs. $38,000 $53,000 Equipment rental. $12,000 $26,000 Occupancy costs......... $16,000 $26,000 Are the materials costs and processing costs relevant in the choice between alternatives X and Y? (Ignore the equipment rental and occupancy costs in this question.) Select one: a. Only materials costs are relevant b. Only processing costs are relevant C. Both materials costs and processing costs are relevant d. Neither materials costs nor processing costs are relevantGiven the two machines' data Machine A Machine B First Cost P8,000.00 P14,000.00 Salvage value Annual operation 2,000.00 3,000.00 2,400.00 Annual maintenance 1,200.00 1,000.00 Taxes and insurance 3% 3% Life, years 10 15 Money is worth at least 16% Using equivalent uniform annual cost method, determine the value of alternative A and alternative B: ANSWER for ALTERNATIVE A: Blank 1 ANSWER for ALTERNATIVE B: Blank 2
