1. To make an investment, a company has borrowed TL 8,000,000 annually for 10 years with 18% annual capital cost rate compounded monthly maturity. By this investment, (ID+5)* 200,000 units per year will be produced. The amount of production will decrease by ((ID+3)/3)% per year for the second 10 years after remaining constant for the first 10 years. The product will be sold at a price of 3 TL/unit. It is expected that annual escalation rate of the product sales price will be 16% in the first 10 years and 22% in the remaining years. 0.2 kg of raw materials will be used for one unit product. The price of the raw material is 0.8 TL/kg. The annual escalation of the raw material price for the first 10 years is 15% and the second 10 years is 25%. A total of 80 kW of electrical power will be consumed in the production system. The company will work (5,000+100*(1+ID)) hours per year. The electricity price is 0.8 TL/kWh. It has been estimated that the annual escalation of the electricity price will be 10% for the first 5 years, 15% for the second 5 years and 20% for the rest of the time. 10 personnel will work on the production system. The average monthly cost of a personnel is 7,000 TL and its annual escalation is 18%. A large maintenance cost will be carried out every 5 years. The maintenance cost at the fifth year is 200,000 TL and the 5-year escalation of this maintenance cost is 80%. Since annual discount rate is (20+1D)%, determine the economic viability of this investment by the annual value method (60 POINTS) 2. The costs and revenues of 2 alternatives for a machine are given below. Determine which alternative is economically viable using the present value method when 20.56% annual discount rate compounded 4-month maturity. (40 POINTS) Parameters 1. Machine 2. Machine Initial investment cost 300,000*(1+ID/10) TL 300,000*(1+2*ID/10) TL Salvage cost (based on initial investment cost) 25% 20% Annual Operating Cost For The First Year 15,000*(1+3*ID/10) TL 15,000*(1+8*ID/10) TL Annual increase rate of operating cost 18% 22% First Year Income 100,000* (2+1D/10) TL 100,000* (3+3*ID/10) TL Annual decrease rate or amount of Income 5,000 TL 1.5% Economic life 10 years 16 years 1. To make an investment, a company has borrowed TL 8,000,000 annually for 10 years with 18% annual capital cost rate compounded monthly maturity. By this investment, (ID+5)* 200,000 units per year will be produced. The amount of production will decrease by ((ID+3)/3)% per year for the second 10 years after remaining constant for the first 10 years. The product will be sold at a price of 3 TL/unit. It is expected that annual escalation rate of the product sales price will be 16% in the first 10 years and 22% in the remaining years. 0.2 kg of raw materials will be used for one unit product. The price of the raw material is 0.8 TL/kg. The annual escalation of the raw material price for the first 10 years is 15% and the second 10 years is 25%. A total of 80 kW of electrical power will be consumed in the production system. The company will work (5,000+100*(1+ID)) hours per year. The electricity price is 0.8 TL/kWh. It has been estimated that the annual escalation of the electricity price will be 10% for the first 5 years, 15% for the second 5 years and 20% for the rest of the time. 10 personnel will work on the production system. The average monthly cost of a personnel is 7,000 TL and its annual escalation is 18%. A large maintenance cost will be carried out every 5 years. The maintenance cost at the fifth year is 200,000 TL and the 5-year escalation of this maintenance cost is 80%. Since annual discount rate is (20+1D)%, determine the economic viability of this investment by the annual value method (60 POINTS) 2. The costs and revenues of 2 alternatives for a machine are given below. Determine which alternative is economically viable using the present value method when 20.56% annual discount rate compounded 4-month maturity. (40 POINTS) Parameters 1. Machine 2. Machine Initial investment cost 300,000*(1+ID/10) TL 300,000*(1+2*ID/10) TL Salvage cost (based on initial investment cost) 25% 20% Annual Operating Cost For The First Year 15,000*(1+3*ID/10) TL 15,000*(1+8*ID/10) TL Annual increase rate of operating cost 18% 22% First Year Income 100,000* (2+1D/10) TL 100,000* (3+3*ID/10) TL Annual decrease rate or amount of Income 5,000 TL 1.5% Economic life 10 years 16 years