1. In building a highways, the district engincer is faced with the alternatives of building a...
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1. In building a highways, the district engincer is faced with the alternatives of building a 4 lane underpass that would take care of all future needs of building, a two lane underpass now and a second 2 lane underpass 20 years later. The 4-lane underpass would cost P400,000 and has a maintenance cost of P10,000 per year during the 40 years it is expected an underpass will be needed. The 2-lane underpass will cost P270,000 cach and each would have a maintenance cost of P8000 per year. If financing costs are 5%, which alternative should be adopted and compute the difference of its equivalent present alternative at the end of 40 years. Use the present worth method. 2. A company is considering two alternatives with regards to an equipment which it needs. The alternatives are as follows: Alternative A: Purchase Cost of equipment --- P700,000.00 Economic life - -10 years -P100,000.00 Salvage value---.. Daily operating cost -------P 500.00 Alternative B: Rental at P1500.00 per day At 18% interest, how many days per year must the cquipment be in use if alternative A is to be chosen. 3. An existing machine is worth P2500 today and will loss P1000 in value by next year plus P500/year thereafter. Its P8000 operating cost for this year is predicted to increase by P1000 annually, owning to deterioration, it salvage value will be zero. A new machine that satisfactorily performs the same function as the existing machine can be purchased for P16000 and is expected to have relatively constant annual operating cost of P6000 up to the end of its 7 year economic life, at which time salvage value will be P1500. No major improvements are expected in the designs for the machines of this type within 7 years. If the minimum attractive rate or return is 12%, should the existing machine be replaced? 4. A local factory assembling calculators produces 400 units per month and sells them at P1800 cach. Dividends are 8% on the 8,000 shares with par value of P250 each. The fixed operating costs are P1000 per unit. Determine the break even point. If only 200 units were produced per month determine the profit and loss/ 1. In building a highways, the district engincer is faced with the alternatives of building a 4 lane underpass that would take care of all future needs of building, a two lane underpass now and a second 2 lane underpass 20 years later. The 4-lane underpass would cost P400,000 and has a maintenance cost of P10,000 per year during the 40 years it is expected an underpass will be needed. The 2-lane underpass will cost P270,000 cach and each would have a maintenance cost of P8000 per year. If financing costs are 5%, which alternative should be adopted and compute the difference of its equivalent present alternative at the end of 40 years. Use the present worth method. 2. A company is considering two alternatives with regards to an equipment which it needs. The alternatives are as follows: Alternative A: Purchase Cost of equipment --- P700,000.00 Economic life - -10 years -P100,000.00 Salvage value---.. Daily operating cost -------P 500.00 Alternative B: Rental at P1500.00 per day At 18% interest, how many days per year must the cquipment be in use if alternative A is to be chosen. 3. An existing machine is worth P2500 today and will loss P1000 in value by next year plus P500/year thereafter. Its P8000 operating cost for this year is predicted to increase by P1000 annually, owning to deterioration, it salvage value will be zero. A new machine that satisfactorily performs the same function as the existing machine can be purchased for P16000 and is expected to have relatively constant annual operating cost of P6000 up to the end of its 7 year economic life, at which time salvage value will be P1500. No major improvements are expected in the designs for the machines of this type within 7 years. If the minimum attractive rate or return is 12%, should the existing machine be replaced? 4. A local factory assembling calculators produces 400 units per month and sells them at P1800 cach. Dividends are 8% on the 8,000 shares with par value of P250 each. The fixed operating costs are P1000 per unit. Determine the break even point. If only 200 units were produced per month determine the profit and loss/
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1 4 lane under pass discount 5 years 40 annual maintenance cost 10000 present value of maintenance c... View the full answer
Related Book For
Probability and Statistics
ISBN: 978-0321500465
4th edition
Authors: Morris H. DeGroot, Mark J. Schervish
Posted Date:
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