EKOTEK

Harun Al Rasyid
1206262235
no
5.1 Differences between mutually projects and independent projects:
Mutually Exclusive Alternatives accomplish same things.
Therefore, there is only one alternative to be selected
resulting in alternatives competing against each other.
Independent Projects accomplish different things.
Therefore, none of them, one of them, some of them,
or all of them can be selected as there is only "do nothing"
alternative to compete against.
5.3 a.

Possible alternatives from four independent projects identified as W, X, Y, Z:

2m = 24
There are 16 possible alternatives.

b.

List of all possibilities

DN, W, X, Y, Z, WX, WY, WZ, XY, XZ, YZ, WXY, WXZ, WYZ, XYZ, WXYZ.

5.5 Equal Service is a requirement which met when alternatives have same capaicities for a same period or life
5.7 Which one should be selected on a basis of a PW analysis at i = 10% / year?
i

10%
In-house
$
$
$
$
$

First Cost
Annual Cost
Annual Income
Salvage Value
Life Year

(30.00)
(5.00)
14.00
2.00
5.00

Contract
$
$
$
$
$

(2.00)
3.10
5.00

Year
0
1
2
3
4
5
Present Worth

$
$
$
$
$
$
$

(30.00)
9.00
9.00
9.00
9.00
11.00
5.36

$
$
$
$
$
$
$

1.10
1.10
1.10
1.10
1.10
4.17

The In-house production should be selected as its revenue is higher

5.9 i

First Cost
Maintenance
Salvage
Life Year
Present Worth

12%
Material X
$
(15,000.00)
$
(9,000.00)
$
2,000.00
5
$
(46,308.13)

PV
$
$
$

(15,000.00)
(32,442.99)
1,134.85

The material X should be selected due to its higher Present Worth

Difference between material X and material Y
Value to be more economic alternative is
5.11 i

First Cost
Annual Cost
Salvage in 5 years
Life Year
Present Worth

6%
Plan A
$ (2,252,000.00)
$
(126,000.00)
$
50
$ (4,237,994.44)

PV
$ (2,252,000.00)
$ (1,985,994.44)
$
-

The Plan B should be selected due to its higher Present Worth

5.13 i

First Cost
Annual Cost
Life Year
Present Worth

10%
250 mm Pipe
PV
$
(155,000.00) $
$
(3,000.00) $
30
$
(183,280.74)

(155,000.00)
(28,280.74)

The 250 mm Pipe should be selected due to its higher Present Worth
5.15 i

First Cost
Monthly Cost
Salvage Value
Life Year
Present Worth

0.75% / month
GM's Volt
$
(35,000.00)
$
$
15,000.00
5
$
(25,251.03)

PV
$
$
$

(35,000.00)
9,748.97

The Nissan's Leaf should be selected due to its higher Present Worth
5.17 i

10%

Year
0
1
2
3
4
5
6
7
8
Present Worth

Year
0
1
2
3
4
5
6
7
8
Present Worth

0
1
2
3
4
5
6
7
8

Annual Cost
$
$
(6,000.00)
$
(6,000.00)
$
(6,000.00)
$
(6,000.00)
$
(6,000.00)
$
(6,000.00)
$
(6,000.00)
$
(6,000.00)

(166,650.63)

Method C
First Cost
Present Value
$
(130,000.00) $ (130,000.00)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

Annual Cost
$
$
(9,000.00)
$
(9,000.00)
$
(9,000.00)
$
(9,000.00)
$
(9,000.00)
$
(9,000.00)
$
(9,000.00)
$
(9,000.00)

(170,971.68)

Method B
First Cost
Present Value
$
(80,000.00) $
(80,000.00)
$
$
$
$
$
$
$
(80,000.00) $
(54,641.08)
$
$
$
$
$
$
$
$
$

Year

Salvage
Present Worth

Method A
First Cost
Present Value
$
(40,000.00) $
(40,000.00)
$
$
$
(40,000.00) $
(33,057.85)
$
$
$
(40,000.00) $
(27,320.54)
$
$
$
(40,000.00) $
(22,578.96)
$
$
$
$
-

Annual Cost
$
$
(4,000.00)
$
(4,000.00)
$
(4,000.00)
$
(4,000.00)
$
(4,000.00)
$
(4,000.00)
$
(4,000.00)
$
(4,000.00)

5,598.09
(145,741.62)

The Method C should be selected due to its higher Present Worth

5.19 i

10%

Year
0
1
2
3
4
5
6
Present Worth

Machine X
First Cost
Present Value
Annual Cost
$
(250,000.00) $ (250,000.00) $
$
$
$ (60,000.00)
$
$
$ (60,000.00)
$
(250,000.00) $ (187,828.70) $ (60,000.00)
$
$
$ (60,000.00)
$
$
$ (60,000.00)
$
$
$ (60,000.00)
$

Year
0
1
2
3
4
5
6
Present Worth

(607,039.13)

Machine Y
First Cost
Present Value
Annual Cost
$
(430,000.00) $ (430,000.00) $
$
$
$ (40,000.00)
$
$
$ (40,000.00)
$
$
$ (40,000.00)
$
$
$ (40,000.00)
$
$
$ (40,000.00)
$
$
$ (40,000.00)
$

(550,585.40)

The Machine Y should be selected due to its higher Present Worth

5.21 i

10%

Year
0
1
2
3
4
5
6
Present Worth

Plan 1
First Cost
Present Value
$
(26,000.00) $
(26,000.00)
$
$
$
$
$
(26,000.00) $
(19,534.18)
$
$
$
$
$
$
$

Year
0
1
2
3

Annual Cost
$
$
(5,000.00)
$
(5,000.00)
$
(5,000.00)
$
(5,000.00)
$
(5,000.00)
$
(5,000.00)

(67,310.49)

First Cost
$
(83,000.00)
$
$
$
-

Plan 2
Present Value
$
(83,000.00)
$
$
$
-

Annual Cost
$
$
(1,400.00)
$
(1,400.00)
$
(3,900.00)

4 $
5 $
6 $
Present Worth

$
$
$

$
$
$

(1,400.00)
(1,400.00)
(3,900.00)

(92,386.84)

The Plan 1 should be selected due to its higher Present Worth

5.23 i

8%

Year
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34

Fan X
First Cost
Present Value
$
(130,000.00) $ (130,000.00)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
-

Annual Cost
$
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)
$
(290.00)

35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
Present Worth

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

Year
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

(290.00)
(290.00)
(290.00)
(290.00)
(290.00)
(290.00)
(290.00)
(290.00)
(290.00)
(290.00)
(290.00)
(290.00)
(290.00)
(290.00)
(290.00)
(290.00)

(133,547.71)

First Cost
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

Fan Y
Present Value
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
-

Annual Cost
$
$
(290.00)
$
(310.00)
$
(330.00)
$
(350.00)
$
(370.00)
$
(390.00)
$
(410.00)
$
(430.00)
$
(450.00)
$
(470.00)
$
(490.00)
$
(510.00)
$
(530.00)
$
(550.00)
$
(570.00)
$
(590.00)
$
(610.00)
$
(630.00)
$
(650.00)
$
(670.00)
$
(690.00)
$
(710.00)
$
(730.00)
$
(750.00)
$
(770.00)

26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

Present Worth

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

(790.00)
(810.00)
(830.00)
(850.00)
(870.00)
(890.00)
(910.00)
(930.00)
(950.00)
(970.00)
(990.00)
(1,010.00)
(1,030.00)
(1,050.00)
(1,070.00)
(1,090.00)
(1,110.00)
(1,130.00)
(1,150.00)
(1,170.00)
(1,190.00)
(1,210.00)
(1,230.00)
(1,250.00)
(1,270.00)

(6,339.57)

Difference between Fan X and Fan Y

Value to be equivalent economic alternative
5.25 i

$
$

127,208.14
127,208.14

14%
I

Life Year (n)

PW over n years
PW over 6 years
PW over 12 years

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

J
$
$
$

3
16.07 $
26.94 $
39.21 $

K
4
31.12 $
15.78 $
60.45 $

12
(257.46)
(653.29)
(257.46)

a. If the alternatives are exclusive the largest Present Worth over 12 years (select L)
b. If the projects are independent choose Present Worth 0 (select J)

5.27 i

Year

12%

First Cost

Process T
Future Value

Annual Cost

0
1
2
3
4

$
$
$
$
$

(750,000.00)
(750,000.00)
-

Future Worth

Year
0
1
2
3
4

$ (1,180,139.52) $
$
$
$ (940,800.00) $
$
$
$
$

(60,000.00)
(60,000.00)
(60,000.00)
(60,000.00)

$ (2,327,699.20)

Process W
First Cost
Future Value
$ (1,350,000.00) $ (2,124,251.14)
$
$
$
$
$
$
$
$
Future Worth

Annual Cost
$
$ (25,000.00)
$ (115,000.00)
$ (25,000.00)
$ (115,000.00)

$ (2,326,630.34)

Process that be selected

Process T

5.29 i

12%

Year
0
1
2
3
4
5
6
7
8

First Cost
$ (1,600,000.00)
$
$
$
$ (1,600,000.00)
$
$
$
$
Future Worth

Year
0
1
2
3
4
5
6
7
8

First Cost
$ (2,100,000.00)
$
$
$
$
$
$
$
$
-

System K
Future Value
$ (3,961,541.08)
$
$
$
$ (2,517,630.98)
$
$
$
$
-

Annual Cost
$
$ (70,000.00)
$ (70,000.00)
$ (70,000.00)
$ (70,000.00)
$ (70,000.00)
$ (70,000.00)
$ (70,000.00)
$ (70,000.00)

$ (6,940,150.58)
System L
Future Value
$ (5,199,522.67)
$
$
$
$
$
$
$
$
-

Annual Cost
$
$ (50,000.00)
$ (53,000.00)
$ (56,000.00)
$ (59,000.00)
$ (62,000.00)
$ (65,000.00)
$ (68,000.00)
$ (71,000.00)

Future Worth

$ (5,921,999.66)

Process that be selected

System K

5.31 i

8%

Year
0
1
2
3
4
5

Capitalised Cost
Annual Cost
Capitalised Cost

Cash Flow
$
(100,000.00)
$
(100,000.00)
$
(100,000.00)
$
(100,000.00)
$
(100,000.00)
$
(100,000.00)
$
(100,000.00)
$
(100,000.00)
$ (1,350,000.00)

5.33 i

12%

PV
A
FV

$
$
$

(300,000.00)
(35,000.00)
(75,000.00)

Capitalised Cost
Annual Cost
Capitalised Cost 1
Capitalised Cost 2
Capitalised Cost 3
Total Capitalises Cost

$
$
$
$
$

(11,805.73)
(300,000.00)
(291,666.67)
(98,381.08)
(690,047.75)

5.35 i

First Cost
Annual Cost
Salvage Value
n

10%
Alternative M
$
(150,000.00)
$
(50,000.00)
$
8,000.00
5

Alternative N
$ (800,000.00)
$
(12,000.00)
$ 1,000,000.00

Comparing the alternatives on a basis of capitalised cost

Present Value 1
Present Value 2
Present Value 3
Present Value total

$
$
$
$

(150,000.00)
(189,539.34)
4,967.37
(334,571.97)

$
$
$
$

(800,000.00)
(120,000.00)
(920,000.00)

Alternative M is selected
5.37 i
n
Annual
Capitalised Cost
Annual Worth
Capitalised Cost

$
$

8%
12.00
(40,000.00)

$
$

(8,507.80)
(106,347.51)

y "do nothing"

projects identified as W, X, Y, Z:

WXZ, WYZ, XYZ, WXYZ.

capaicities for a same period or life

Material Y
$
(35,000.00)
$
(7,000.00)
$
20,000.00
5
$
(48,884.90)

$
$

PV
$
$
$

(35,000.00)
(25,233.43)
11,348.54

(2,576.76)
(30,000.00)

Plan B
$ (3,462,120.00)
$
$
500,000.00
50
$ (3,088,490.91)

PV
$ (3,462,120.00)
$
$
373,629.09

300 mm Pipe
PV
$
(210,000.00) $
$
$
30
$
(210,000.00)

Nissan's Leaf
$
(1,500.00)
$
(349.00)
$
5
$
(18,312.51)

PV
$
$
$

(210,000.00)
-

(1,500.00)
(16,812.51)
-

Present Value
$
$
(8,181.82)
$
(7,438.02)
$
(6,761.83)
$
(6,147.12)
$
(5,588.29)
$
(5,080.27)
$
(4,618.42)
$
(4,198.57)

Present Value
$
$
(5,454.55)
$
(4,958.68)
$
(4,507.89)
$
(4,098.08)
$
(3,725.53)
$
(3,386.84)
$
(3,078.95)
$
(2,799.04)

Present Value
$
$
(3,636.36)
$
(3,305.79)
$
(3,005.26)
$
(2,732.05)
$
(2,483.69)
$
(2,257.90)
$
(2,052.63)
$
(1,866.03)

ne X
Present Value
$
$
(54,545.45)
$
(49,586.78)
$
(45,078.89)
$
(40,980.81)
$
(37,255.28)
$
(33,868.44)

Salvage
Present Value
$
$0.00
$
$0.00
$
$0.00
$
70,000.00
$52,592.04
$
$0.00
$
$0.00
$
70,000.00
$39,513.18

Present Value
$
$
(36,363.64)
$
(33,057.85)
$
(30,052.59)
$
(27,320.54)
$
(24,836.85)
$
(22,578.96)

Salvage
$
$
$
$
$
$
$
95,000.00

ne Y

Present Value
$
$
(4,545.45)
$
(4,132.23)
$
(3,756.57)
$
(3,415.07)
$
(3,104.61)
$
(2,822.37)

Present Value
$
$
(1,272.73)
$
(1,157.02)
$
(2,930.13)

Present Value
$
$
$
$
$
$
$
53,625.02

$
$
$

(956.22)
(869.29)
(2,201.45)

Present Value
$
$
(268.52)
$
(248.63)
$
(230.21)
$
(213.16)
$
(197.37)
$
(182.75)
$
(169.21)
$
(156.68)
$
(145.07)
$
(134.33)
$
(124.38)
$
(115.16)
$
(106.63)
$
(98.73)
$
(91.42)
$
(84.65)
$
(78.38)
$
(72.57)
$
(67.20)
$
(62.22)
$
(57.61)
$
(53.34)
$
(49.39)
$
(45.73)
$
(42.35)
$
(39.21)
$
(36.30)
$
(33.61)
$
(31.12)
$
(28.82)
$
(26.68)
$
(24.71)
$
(22.88)
$
(21.18)

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

(19.61)
(18.16)
(16.82)
(15.57)
(14.42)
(13.35)
(12.36)
(11.44)
(10.60)
(9.81)
(9.09)
(8.41)
(7.79)
(7.21)
(6.68)
(6.18)

Present Value
$
$
(268.52)
$
(265.78)
$
(261.96)
$
(257.26)
$
(251.82)
$
(245.77)
$
(239.23)
$
(232.32)
$
(225.11)
$
(217.70)
$
(210.15)
$
(202.53)
$
(194.88)
$
(187.25)
$
(179.69)
$
(172.22)
$
(164.86)
$
(157.66)
$
(150.61)
$
(143.75)
$
(137.07)
$
(130.60)
$
(124.33)
$
(118.27)
$
(112.43)

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

(106.81)
(101.40)
(96.21)
(91.23)
(86.46)
(81.89)
(77.53)
(73.37)
(69.39)
(65.61)
(62.00)
(58.57)
(55.30)
(52.20)
(49.25)
(46.46)
(43.81)
(41.29)
(38.91)
(36.65)
(34.52)
(32.50)
(30.59)
(28.78)
(27.08)

L
$
$
$

6
140.46
140.46
204.46

ars (select L)
Alt I
Alt J
Alt L

Future Value

204.46
39.21
60.45
204.46

$
$
$
$
$

(84,295.68)
(75,264.00)
(67,200.00)
(60,000.00)

Future Value
$
$
(35,123.20)
$
(144,256.00)
$
(28,000.00)
$
(115,000.00)

Future Value
$
$
(154,747.70)
$
(138,167.59)
$
(123,363.92)
$
(110,146.36)
$
(98,344.96)
$
(87,808.00)
$
(78,400.00)
$
(70,000.00)

Future Value
$
$
(110,534.07)
$
(104,612.60)
$
(98,691.13)
$
(92,837.64)
$
(87,105.54)
$
(81,536.00)
$
(76,160.00)
$
(71,000.00)