29 Jun Question Question 1 Evaluate the following Cash
Question
Question 1
Evaluate the following Cash Flows using the criteria in parts a-f and MARR. Parts a-d should use a 6-year time span. Indicate for each part whether the proposal should be accepted or rejected.
MARR=10%
Year 0 1 2 3 4 5 6
Cash Flow ($80,000) $13,200 $19,800 $22,100 $25,000 $25,000 $20,000
a Present Worth (PW)
b Future Worth (FW)
c Annual Worth (AW)
d Internal rate of Return (IRR)
e Discounted Payback by end of year (EOY) 4
f Traditional Payback (no discounting) by end of year (EOY) 4
Question2
Three alternatives have been proposed with the investment and forecasted annual cash flows shown below. Salvage values should be ignored. A MARR of 12.5% and a four year time-span is to be used. Resources are available for only one of the three alternatives.
Determine which one should be selected usingonly the internal rate of return criterion.
Enhancement
Annual cash flow
Investment
A1
$17,50,000
$50,00,000
A2
$15,50,000
$44,00,000
A3
$13,00,000
$37,00,000
Enhancement
Annual cash flow
Investment
A1
$17,50,000
$50,00,000
A2
$15,50,000
$44,00,000
A3
$13,00,000
$37,00,000
Question 3
Third-in-Line, LLC had sales and costs as shown below in 2012..
a What was the profit in 2012
b What is the break even quantity?
c If the price, fixed cost and the variable cost per unit stay the same as in 2012, what will the quantity sold have to be to increase profits to $1 million in the coming year?
d If the sales quantity, price, and fixed cost stay the same as in 2012, what would the unit variable cost need to be to increase profits to $1 million in the coming year?
2012
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