The six independent projects shown below are presented to you as an engineer with Peyton Packing. There are capital budget constraints because the company always has more projects to engage in than it has capital to fund them. Therefore, Peyton uses a relatively high MARR of 25% per year. Since all projects are considered long-term ventures, the company uses an infinite period for their life. Determine which projects to fund and the total investment for a limited capital budget of (a) $700,000, and (b) $600,000. The selection should be based on three measures: (1) IROR, (2) PI, and (3) PW.
 FIGURE 1.png)
The IROR, PI, and PW values are shown in the table below. Sample calculations for project F are:
IROR: 54,000/200,000 = 27.0%
PI: [54,000/0.25)]/200,000 = 1.08
PW: -200,000 + 54,000/0.25 = $16,000
Projects G and K can be eliminated since their IROR, PI and PW are not acceptable.
 ANSWER.png)
(b) b = $600,000
(1) IROR: Projects selected are I and J with $420,000 invested
(2) PI: Projects selected are I and J with $420,000 invested
(3) PW: Project selected is only I with $370,000 invested
(Note: The PW-based selection is different for the reduced budget of $600,000)
You might also like to view...
Technician A says a battery gives off sulfur gas during the charging process. Technician B says that during the charging process, a battery gives off explosive hydrogen gas. Who is correct?
A. Technician A B. Technician B C. Both A and B D. Neither A nor B
Insects can be beneficial and are often an essential part of a garden ecosystem.
Answer the following statement true (T) or false (F)
?Technician A says that when oil oxidizes it becomes heavier and forms varnish deposits. Technician B says that in-town driving is easier on the engine than driving on the freeway. Who is right?
A. ?Technician A only B. ?Technician B only C. ?Both A and B D. ?Neither A nor B
For the equation 2 x - ?x - 3 = 0 with an initial guess x(0) = 1, do two Gauss iterations to determine x(2).
What will be an ideal response?