Ch. Benefit / Cost Analysis Problem 1: ICON Co. will perform a project that will have a first cost of $1 million with an annual maintenance cost of $50,000 and a 10 year life. This project is expected to benefit the company with $250,000 per year. But also the lost income to the company is estimated to be $30,000 per year. At an interest rate of 6% per year, should the project be undertaken? Problem2:ICON Co. is planning to make a new road that has a first cost $200,000. Also to maintain this road, they need to spend $20,000 per year. This road is expected to increase their property value by 200%. If the previous market value of a property was $1,000,000, calculate the B/C ratio using an interest rate of 6% per year and a 20-year study period. CH: Replacement Retention Problem3: Determine the ESL of an asset which has the costs shown below. Leti - 10% Year Cost, $/year Salvage values -10,000 -5,000 10,000 -5,000 9,000 -6,000 6,000 Ch: Breakeven Analysis Problem4: A plant produces 10,000 units/month. Find breakeven level if FC = $50,000 /month, revenue is $8/unit and variable cost is $3/unit. Determine expected monthly profit or loss Problem 5: Make option is estimated to cost $20,000, have a life of 5 years, and have a $5000 salvage value, and annual VC 0.5 while Buy option annual VC is 2. Perform a make/buy analysis where the common variable is X, the number of units produced each year. AW relations are: Use a MARR of 15% per year CH: Effect of Inflation: Problem 6: If a machine have a cost of $30,000 (future cost) five years from now. Find the PW of the machine, if the real interest rate is 4% per year and the inflation rate is 2% per year using future dollars. CH: Depreciation Problem 7: BMW car has a first cost of $300,000 with a $100,000 salvage value after 4 years. Find (a) D2 and (b) BV2 for year two