OT 5 Problem #1 Consider four plastic presses. Suppose that each press is capable of producing 120,000 total units per year, but the estimated reject rate is different for each alternative. This means that the expected revenue will differ among the alternatives since only nondefective units can be sold. The data for the four presses are summarized below. The life of each press (and the study period) is five years Press PI P2 P3 P4 Capital Investment Total annual Expenses Reject Rate $24,000 $31,200 8.4% $30,400 $49,600 $52.000 $29.128 0.3% $25.192 $22,880 2.6% 5.696 Part A- If all nondefective units can be sold for $0.375 per unit and the MARR=10%, which press should be chosen? On the same excel spreadsheet use the following methods: a- Present Worth b- Annual Worth c- IRR Problem #1 Part B- Re-evaluate the recommended alternative if (a) the MARR=15% per year: (b) the selling price is $0.5per good unit; and (c) rejected units can be sold as scrap for $0.1 per unit. a- what is the recommended alternative if all these changes occur simultaneously? (use PW method) 7 Problem #2 Study the following two alternatives using the Internal Rate of Return method. State what MARR conditions will govern your selection of one or the other, providing that the null alternative does not exist. Year A B -2500 -1850 1 1200 650 2 50 50 3 1620 4 500 940 1400 Problem #3 Your company operates a fleet of flight trucks that are used to provide contract delivery services. As the engineering and technical manager, you are analyzing the purchase of 55 new trucks as an addition to the fleet. These trucks would be used for a new contract the sales staff is trying to obtain. If purchased, the trucks would cost $21,200 each; estimated use is 20,000 miles per year per truck; estimated annual operation and maintenance and other related expenses (year-zero dollars) are $0.45per mile which is forecasted to increase at a rate of 5% per year; and estimated annual revenue (in actual $) are $20,000 per year per truck required. The trucks are MACRS-GDS three-year property class assets. The analysis period is four years: t=38%; after-tax MARR-15% per year (after-tax; includes an inflation component): and the estimated MV at the end of four years (in year-zero dollars) is 35% of the purchase price of the vehicles. This estimate is expected to increase at the rate of 2% per year. Part A: Create a spreadsheet to determine whether your company should buy the new trucks. Develop the spreadsheet for each truck (per truck). Part B: Based on an after-tax, actual-dollar analysis, what is the annual revenue required by your company from the contract to justify these expenditures before any profit is considered