6-36. Three mutually exclusive alternatives are being considered for the production equipment at a tissue paper factory. The estimated cash ows for each alternative are given here. {All cash flows are in thousands.) Which equipment alternative, if any, should be selected? The firm's MARR is 20% per year. Please state your assumptions. (6.5) A 8 C Capital tnvatment $2,000 $4,103!) $7,000 Annual revenues 3,200 6,(IJO 8010 Annual costs 2,100 4,030 5,100 Market value at 100 420 6G) end of useful life Useful life (years) 5 10 10 6-43. IBM is considering an environmentally conscious green building at one of its new production facilities. The company will decide among three different green designs for the facility, and each of the final mutually exclusive concepts for the facility results in different costs and savings. These three concepts are summarized below. IBM uses 10% per year as its profitability benchmark {hurdle rate) for such comparisons. Which facility concept should be selected? (6.5) Concept A Concept 8 Concept C Initial investment $35,000,\")0 $100,000,000 $50,000,000 Net annual savings 11,303,\" 12,0\"),0\") 75(1),\" Salvage (market) value 85,000,\")0 100,000,000 50,000,000 Useful life 60 years 60 years 40 years 6-66. Bob and Sally have just bought a new house and they are considering the installation of 10 compact uorescent bulb {CFBJ xtures instead of the 10 conventional incandescent lighting fixtures {which cost a total of $500) typically installed by the builder. According to the home builder, CFBs use 70% less electricity than incandescent bulbs, and they last 10 times longer before the bulb needs replacement. Bob calculates that 1,000 watts of incandescent lighting will be required in the house for 3,000 hours of usage per year. The cost of electricity is $0.10 per kWh. Also, each CFB will save 150 pounds of C02 per year. Each pound of (:02 has a penalty of $0.02. If incandescent bulbs cost $0.75 each and last for one year, use a 10-year study period to determine the maximum cost of CFB xtures and bulbs that can bejustified in this house. MARR = 8% per year. (6.4) 6-75. You can earn thousands of dollars more from your mutual funds. The secret is to purchase no-load (no front-end commission) funds directly from companies specializing in this area. You can save 5.7596 commission compared to \"loaded" mutual funds when you buy noload funds. That means you earn $4,000 more on a $23,000 investment over 10 years. In this situation, the average annual interest rate of the fund is most closely which answer below? (6.6) (a) 6% (b) 12% (c) 15% (d) 99
