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If an alternative has an advance payment of $100,000 upon contract award and then quarterly payments of $25,000 for the next 3 years, what would the cash flow diagram look like? Select the correct choice from each pair of answers.

$100K EOY1 or $100K BOY1

$100K MOY1 or $25K MOY1

$100K MOY2 or $25K MOY2

$100K MOY3 or $25K MOY3

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Elin Hessel
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4 Feb 2019

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Related questions

If an alternative has an advance payment of $100,000 upon contract award and then quarterly payments of $20,000 for the next 3 years, what would the cash flow diagram look like? Select the correct choice from each pair of answers.

$100,000 EOY 1 $100,000 BOY 1

$80,000 MOY 1 $20,000 MOY 1

$80,000 MOY 2 $20,000 MOY 2

$80,000 MOY 3 $20,000 MOY 3

  1. 1. What is the capitalized value of an infinite series of $1,000 biennial (every two years) payments? MARR = 10%

    $4,950

    $4,025
    .

    $4,350


    $4,762

    1. 2. Frank West Enterpises would like to choose one of the following plans for expansion. Using present worth analysis, find the best alternative among the three alternatives and the Do-Nothing.

      Alt. A

      Alt. B

      Alt. C

      Initial Cost

      $10,000

      $21,000

      $8,000

      EUAB

      $6,000

      $7,000

      $4,000

      EUAC

      $1,500

      $1,000

      $2,000

      Salvage Value

      $2,000

      $8,000

      $3,000

      Life

      2 Years

      3 Years

      2 Years

      Use a MARR of 10%.

      .

      Do-Nothing
      .

      Alt. C
      .

      Alt. B
      .

      Alt. A

      3.

      1. U. S. Engineering is investigating the possibility of acquiring new automated packaging equipment at a cost of $12,000. It is expected that the equipment will have a salvage value of $1,000 at the end of its useful life of 10 years. It is determined by the plant engineering department at the company that the operation and maintenance cost will be $500 in the first year and will gradually increase every year starting year 2 at the rate of $50 until the equipment is retired. Determine the equivalent uniform annual cost (EUAC) if MARR for the company is 10%.

        $2,575.95


        $2,150.50
        .

        $2,176.60
        .

        $2,184.40

        4.

        1. The cash flows given in table below are for two different alternatives. MARR =10%

          Data

          C

          D

          Initial Cost

          $20,000

          $80,000

          Uniform Annual Benefits

          $6,000

          $10,000

          Salvage Value

          $5,000

          $20,000

          Useful Life in years

          5

          infinity

          The equivalent uniform annual worth (EUAW) of alternative N is ______________.

          Hint: Assume the Salvage Value is never realized since N is infinite.

          $2,000

          $1,920

          $1,762


          $2,476

          5.

          1. Compare the following plans using a MARR of 6%.

            Data

            Plan X

            Plan Y

            Equipment First Cost

            $50,000

            $75,000

            Annual Operation & Maintenance Cost

            $3,000

            $2,500

            Salvage Value

            $10,000

            $0

            Service Life, Years)

            25

            50


            $6,728; $7,255


            $7,255; $9,000
            .

            $6,728; $7,728
            .

            $6,728; $8,200

            6.

            1. LAEP, Inc. wants to evaluate two methods of shipping their products. The following cash flows are associated with each alternative:

              Data

              Method

              A

              B

              Life (Years)

              10

              10

              First Cost

              $700,000

              $1,512,000

              M&O Cost

              $18,000

              $9,000

              M&O Cost Gradient

              $900

              $775

              Annual Benefit

              $154,000

              $303,000

              Salvage Value

              $142,000

              $210,000

              Annual profits are based on amount of products which can ordinarily be shipped each year as a function of the amount of vehicles or service purchased with the first cost and the M&O costs.

              Using a MARR of 15%, calculate the equivalent uniform annual cash flow (EUAB - EUAC) for each alternative.

              Determine the most desirable alternative based on the results.

              $389.57, $445.90; Method A


              $445.90, $389.57; Method A
              .

              $445.90, $389.57; Method B
              .

              $389.57, $445.90; Method B
            7.

            1. For the cash flow diagram shown, which of the following equations properly calculates the uniform equivalent (A)?

              n

              0

              3

              6

              9

              12

              15

              Dollars

              $100

              $100

              $100

              $100

              $100

              $100


              A=100(A/P,i,15)+ 100(A/F,i,3)


              A=100(A/P,i,15)


              A=100(A/F,i,3) + 100(A/F,i,15)


              A=100(A/P,i,3) + 100(A/F,i,3)
              8.

              1. Three different alternatives shown in table below are being considered by U. S. Engineering systems.

                Assume that alternatives X and Z are replaced at the end of their lives.

                Data

                Alternative X

                Alternative Y

                Alternative Z

                Initial Cost

                $6,000

                $1,000

                $1,500

                Uniform Annual Benefits

                $810

                $125

                $ 230

                Useful Life in Years

                20

                infinite

                10

                MARR

                12%

                The NPW for alternative

Alternatives and Costs

In the fall, Jay Thompson decided to live in a university dormitory. He signed a dorm contract under which he was obligated to pay the room rent for the full college year. One clause stated that if he moved out during the year, he could sell his dorm contract to another student who would move into the dormitory as his replacement. The dorm cost was $5,000 for the two semesters, which Jay had already paid.

A month after he moved into the dorm, he decided he would prefer to live in an apartment. That week, after some searching for a replacement to fulfill his dorm contract, Jay had two offers. One student offered to move in immediately and to pay Jay $300 per month for the eight remaining months of the school year. A second student offered to move in the second semester and pay $2,500 to Jay.

Jay estimates his food cost per month is $500 if he lives in the dorm and $450 if he lives in an apartment with three other students. His share of the apartment rent and utilities will be $400 per month. Assume each semester is 4.5 months long. Disregard the small differences in the timing of the disbursements or receipts.

(a) What are the three alternatives available to Jay?

(b) Evaluate the cost for each of the alternatives.

(c) What do you recommend that Jay do?

From Chapter 2

Fixed, Variable, Average, and Marginal Costs

One of your firm’s suppliers discounts prices for larger quantities. The first 1,000 parts are $13 each. The next 2,000 are $12 each. All parts in excess of 3,000 are $11 each. What are the average cost and marginal cost per part for the following quantities?

(a) 500

(b) 1,500

(c) 2,500

(d) 3,500

Fixed, Variable, Average, and Marginal Costs

A new machine comes with 100 free service hours over the first year. Additional time costs $75 per hour. What are the average and marginal costs per hour for the following quantities?

(a) 75

(b) 125

(c) 250

Segmenting Models

SungSam Inc. is designing a new digital camcorder that is projected to have the following per unit costs to manufacture:

Cost Categories Unit Costs

Materials costs $63

Labor costs 24

Overhead costs 110

------

Total unit cost $197

Sungsam adds 30% to its manufacturing cost for corporate profit.

(a) What unit profit would Sungsam realize on each camcorder?

(b) What is the overall cost to produce a batch of 10,000 camcorders?

(c) What would Sungsam’s profit be on the batch of 10,000 if historical data show that 1% of product will be scrapped in manufacturing, 3% of finished products will go unsold, and 2% of sold product will be returned for refund?

(d) How much can Sungsam afford to pay for a contract that would lock in a 50% reduction in the unit material cost previously given? If Sungsam does sign the contract, the sales price will not change.

Cash Flow Diagrams

Pine Village needs some additional recreation fields. Construction will cost $225,000 and annual O&M expenses are $85,000. The city council estimates that the value of added youth leagues is about $190,000 annually. In year 6 another $75,000 will be needed to refurbish the fields. The salvage value is estimated to be $100,000 after 10 years. Draw the cash flow diagram.

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