incr. analysis and capital budgeting

Project Description:

1. differential analysis problem and essay/analysis.

required answer these questions in the box below, and be sure to number your answers:
1. read the situation below and prepare a chart that calculates the net differential cost of the two alternatives, given the information provided. clearly indicate which alternative is the most favorable, based on your quantitative analysis in #1 (16 points)
2. list additional quantitative factors you would like to consider for a more complete analysis. [7 points]
3. list qualitative factors that would also influence your decision. [7 points]
4. answer: what would you choose, and why?

decision: make a thermos of coffee every day, or buy that mucho grande latte @ $3.50?

1. you work 5 days per week for 40 weeks per year, and you plan to stay at your job for 30 years.

2. a 1 pound can of don juan columbo coffee costs $8 per can, and it can make 16 thermoses of coffee.

3. you use 1/2 cup (4 oz) of regular milk per thermos. a quart of milk (32 oz) costs $1.60.

4. a thermos costs $20 and you will probably have to replace you thermos once every 5 years.

5. it takes you 15 minutes to make a thermos of coffee (including waiting time, while you are getting dressed); it also takes you 15 minutes to buy a mucho grande latte from moonbux (including parking and waiting). you make $40 per hour.

part i: quantitative analysis: using the data above, prepare a differential analysis chart comparing the cost of making or buying coffee 5 days a week for the period of time you anticipate working. clearly calculate the differential cost over the entire time period.

part ii: some quantitative data is missing from this problem that would be relevant to any decision. please list quantitative items that are missing, or that seem inadequate.

part iii: list the qualitative decision factors that would influence your decision.

part iv: what would you decide and why?
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