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The marketing department has predicted that sales might be as high as 10,000 units per year. Construct the probability distributions for sales and unit profits.
Historical data suggest that the probability of cool, damp weather is 30% and that of dry, hot weather is 20%. Find the project's probability distribution.
There is no recognizable pattern. Calculate the probability distribution for next year's discount rate.
What is the present worth for each estimated value? Does the answer to (b) match the present worth for the most likely value? Why or why not?
Determine the pessimistic and optimistic rates of return. Use range of estimates to compute the mean life and determine the estimated before-tax rate of return.
Find the equivalent uniform annual cost if the interest rate is 8%. How much does this change if the annual mileage is 15,000? 5000?
What percentage of all telephone poles would you expect to have a total useful life greater than your estimated optimistic life?
If a fair interest rate is 9%, what is the firm paying for the flexibility of being able to stop leasing the equipment after 1, 2, 3, or 4 years?
Assuming a 10% interest rate, how much could one afford to pay for the wood preservative treatment?
outhwest Airlines flies nonstop between Tampa and Albuquerque with 137-passenger planes. What percentage of seats must be filled for the flight to break even?
If the funds are invested at 9% per year and the museum is to exist forever, how many cars should the trustees plan to purchase?
To obtain a 12% rate of return what is the minimum number of days per year on average it will have to be used.
What is the maximum that should be spent for asphalt if it lasts only 10 years? How long must it last to be the preferred alternative?
How many miles must Victoria drive in a year before the hybrid vhicle becomes more cost efficient to her?
How low could the resale value of the Fiasco be to provide equally economical transportation?
Using Tom's data, what is the payback period if the solar water heater system is installed, rather than the conventional electric water heater?
What is the payback period? If he kept the computer and software for 6 years, what would be the benefit-cost ratio, based on a 10% interest rate?
A new milling machine with an 8-year life will cost Brake-O-Mastic $48,000. If money costs Brake-O-Mastic 12%, what is the present worth index?
ABC uses a PW index that is calculated by dividing the PW of benefits by the PW of costs. Determine the PW index at 8%.
The plant will require a major overhaul every 5 years, costing $1M. Determine the benefit/cost ratio at the city's interest rate of 6%.
The plant's air pollution will cost residents $3 each per year. If i = 5%, should the new power plant be built?
Is the plant economically justifiable to the firm with the subsidy? Now what is the PWI? How important is the difference in interest rates?
What is the payback period (in years)? What is the breakeven point (in years)? Since the answers in (a) and (b) are different, which one is correct?
How long must the treated part last to be the preferred alternative, assuming 10% interest?
Plan A requires a $100,000 investment now. At 8% interest, compute the breakeven point for the timing of the $40,000 investment.