R & N wants to expand its brick manufacturing company by adding another project. Therefore, it...
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R & N wants to expand its brick manufacturing company by adding another project. Therefore, it has four projects to evaluate and chose one that is suitable. The plant for each product can produce 300 000 units a year with different percentages of waste and has no market value at the end of its useful life of 30 years. The capital invested is expected to earn 10% per year and the waste is assumed not to influence the annual expenses. Evaluate the projects through calculations and choose the project that maximises all the three equivalent worth measures of overall profitability. Also, perform the preference ranking. The projects are presented in the following Table: Capital Investment Total annual expenses Selling price Waste per year Floor Tiles R750000 R465000 R15/unit 4% Roof Tiles R895 000 R440 000 R30/unit 4% Windowsills R650 000 R390 000 R25/unit 0.6% Clay vases R450 000 R410 000 R60/unit 0.4% R & N wants to expand its brick manufacturing company by adding another project. Therefore, it has four projects to evaluate and chose one that is suitable. The plant for each product can produce 300 000 units a year with different percentages of waste and has no market value at the end of its useful life of 30 years. The capital invested is expected to earn 10% per year and the waste is assumed not to influence the annual expenses. Evaluate the projects through calculations and choose the project that maximises all the three equivalent worth measures of overall profitability. Also, perform the preference ranking. The projects are presented in the following Table: Capital Investment Total annual expenses Selling price Waste per year Floor Tiles R750000 R465000 R15/unit 4% Roof Tiles R895 000 R440 000 R30/unit 4% Windowsills R650 000 R390 000 R25/unit 0.6% Clay vases R450 000 R410 000 R60/unit 0.4%
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ANSWER To evaluate the profitability of the four projects and choose the most profitable one we need to calculate the equivalent worth measures The three equivalent worth measures of overall profitabi... View the full answer
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