Question 1: A capacity alternative has an initial cost of $50,000 and cash flow of $20,000 for each of the next four years. If the cost of capital is 5 percent, the net present value of this investment is:
a) greater than $130,000
b) greater than $80,000
c) impossible to calculate, because no interest rate is given
d) less than $30,000
e) impossible to calculate, because variable costs are not known
Question 2: An item's holding cost is 60 cents per week. Each setup costs $120. Lead time is 2 weeks. EPP is: