Spring 2024 An energy efficiency project has a first costof $400,000, a life of 10 years, and no salvage value.Assume that the interest rate is 10%. The most likelyvalue for annual savings is $50,000. The optimisticvalue for annual savings is $80,000 with a probabilityof 0.2. The pessimistic value is $40,000 with aprobability of 0.25. a. What is the expected annualsavings and the expected PW? b. Compute the PW forthe pessimistic, most likely, and optimistic estimates ofthe annual savings. What is the expected PW?Spring 20241. An energy efficiency project has a first cost of $400,000, a life of 10 years, and no salvage value.Assume that the interest rate is 10%. The most likely value for annual savings is $50,000. Theoptimistic value for annual savings is $80,000 with a probability of 0.2. The pessimistic value is$40,000 with a probability of 0.25.What is the expected annual savings and the expected PW?b. Compute the PW for the pessimistic, most likely, and optimistic estimates of the annualsavings. What is the expected PW?

Part 2:Explanation:Step 1: Calculate the expected annual savings by taking the weighted average of…

Answered: Spring 2024 An energy efficiency…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

There is a 50% chance that consumer spending will increase next year. Our clothing business heavily depends on levels of consumer spending. The table below shows the profits for various alternatives. Increase Decrease 0.5 0.5 Purchase footprint 5 4 3 0 Short-term lease Expand e-commerce Keep all as is 0213 What should we do based on Maximax? Short-term lease Keep all as is Expand e-commerce Purchase footprint
When MC rises, the value of AVC will also rise. True / False
Your firm uses a continuous review system and operates52 weeks per year. One of the SKUs has the followingcharacteristics.Demand 1D2 = 20,000 units>yearOrdering cost 1S2 = $40>orderHolding cost 1H2 = $2>unit>yearLead time 1L2 = 2 weeksCycle@service level = 95 percentDemand is normally distributed, with a standard deviation ofweekly demand of 100 units.Current on-hand inventory is 1,040 units, with no scheduledreceipts and no backorders.a. Calculate the item’s EOQ. What is the average time, inweeks, between orders?b. Find the safety stock and reorder point that provide a95 percent cycle-service level c. For these policies, what are the annual costs of (i) holdingthe cycle inventory and (ii) placing orders?d. A withdrawal of 15 units just occurred. Is it time to reor-der? If so, how much should be ordered?
True/False AVC can fall even when MC is rising
SHOW IN EXCEL SHOW EACH PROCESS IN EXCEL Gasoline EV Purchase Cost $50,000 $80,000 Annual - Maintenance $5,000 $2,500 Annual Fuel $7,500 $3,000 Service Life Probability Service Life Probability 55% 52% 6 10% 65% 7 25% 7 10% 8 35 % 8 25% 9 20% 9 50 % 10 5 % 10 8% a) (5 Points) What is the expected value of the present worth and expected value of the standard deviation of each option? b) (5 Points) Which option should be chosen, and why? c) (5 Points) If the company' s MARR is 20%, which option would they choose and why? d) (5 Points) What value of the MARR makes the company indifferent between choosing gasoline or electric vehicles?
The Enrico Oil Company is deciding whether to drill for oil on a tract. The company estimates thatthe project would cost $8 million today. The company estimates that once drilled, the oil willgenerate positive net cash flow of $4 million a year for the next 4 years. The company recognizes,however, that if it waits 2 years, it could cost $9 million, but there is a 90% chance that the nextcash flow will be $4.2 million and there is a 10% chance that the net cash flow will be $2.2 milliona year for 4 years. Assume that all cash flows are discounted at 10%. Required:i. If the company opts to drill today, what is the project’s NPV? ii. Evaluate whether it would be worthwhile to wait 2 years before deciding whether todrill?
At expiration, if you have been diligently delta hedging,, the delta of an option will be: A. 100% if it's in the money and exercised or Zero if it expires out-of-the-money B. 100% if it expires out-of-the-money or zero if it's in the money and exercised C. It depends if you exercise it, sometimes even if an option is in the money at expiration you may chose not to exercise it because you did not cover the cost of your premium. D. You should not be delta hedging if you have a good idea of where ithe underlying is going
CALLS PUTS Dec Jan Feb Strike Price Dec Jan Feb 15 8.85 149 2.67 6.6 7.93 4.25 8.35 9.65 150 3.15 7. 8.38 2.97 7.95 152 4.2 8.1 9.5 1.88 5.83 7.36 155 5.85 9.3 10.64 An investor purchased one 150 Dec Call and sold one 155 Dec Put. What is the name of this option strategy? Select one: O a. Strap O b. Straddle O c. Strip O d. Bull Spread e. None of these Of. Bear Spread
A Treasurer buys a 6-month CD issued by a top-class bank with a tenor of 180 days at a yield of 16%. The face value at issue is GHe10m. In 90-days time the buyer sells the CD when the 3-month secondary market for CDs issued in the ames of top-class banks is 15.40/14.50. The buyer has held the CD for 90days, but now wants his cash back. What is the return on the investment for the Treasurer?
In net present worth analysis over a period, if the net present worth value is equal to zero, the initial investment ______ a. has not produced profits b. has no certainty of gians c. has been fully account by the operation d. has a tendency to produce more losses e. has been applied with correct interest A company invests on selling computer units worth Php 32,000.00. The probability of maintaining this price throughout the year is 65% while that of less or more than 10% the expected are 15% and 20%, (a) what is the probability that the selling price for that year is more than the expected price? a. 0.8 b. 0.85 c. 0.25 d. 0.2 e. 1 f. 0.15 g. 0.65
1. Using the Standard Select Life Table at 5% per year interest, calculate the standard deviation of the present value of an annuity of $10000 per year payable annually in advance to a life aged 40.
Please show work on Excel. A new engineer is evaluating whether to use a larger diameter pipe for a water line. The pipe will cost $327,089 more initially but will reduce pumping costs. The optimistic, most likely, and pessimistic projections for annual savings are $30,000, $20,000, and $5000, with respective probabilities of 20%, 50%, and 30%. The interest rate is most likely to be 7%, but is equally likely to be 6% or 8%, and the water line should have a life of 40 years. Find the expected annual savings and the expected interest rate. Determine the Expected PW based on these. Hint: Based on the different saving and their probabilities, find the expected value of savings. Then find the expected value of the interest rate (each option has equal probability). Then find the PW using these values.

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS