QI) A Plastic company is Ramallah city is considering the following two mutually exclusive alternatives to replace the existing deteriorated production line. The development department has collected the following data about the available options. i- 10%. (30 marks) Alternative Option A Option B Item year Capital investment cost S12.000 $14,000 Annual Maintenance and $1,000 per year $1.200 per year Operation cost Insurance Cost $250 each two years starting at the end of $350 each three years starting at the end of the 3 the 2 year Income SY $4,500 each year Salvage value 1200 1500 Useful life (years) 8 12 A) TE Y $4000, what is the preferable option using Present wneth analysis (12 marks) B) Find the value of Y that makes option A equivalent to option B. (12 marks) C) Find the capital recovery for option A. (6 marks) Q2) You are working in a consulting company and given the following information regarding a certain investment project as follows: (MARR-10%) (25 marks) Alternative Diesel Item Initial investment $10,000 Net Annual Profit $5.000 Useful life 4 years A) What is the ROR for this project B) Determine the discounted payback period for the project. 03) The following table contains a cash flow series for an investment opportunity(30 marks) Year O 3 5 Net Cash flow +3,000 - 1000 5000 +2000 + 2000 + 2000 (NCE) 1) What is the type of this cash flow (conventional or non-conventional). Do we have single or multiple RoR? (4 marks) 2) If we have multiple rates, remove the multiple rate by using modified rate of return method (MIRR) with i. -9%, and i 12%, or use the conventional method if having single ROR with MARR -6% (12 marks) 3) Is the investment justified or not knowing that MARR -6% (4 marks) 04) Compare between the following ME alternatives using incremental rate of return analysis with MARR-6%: (25) Alternative A B Item Initial Cost 160 120 Benefits/year 20 18 Salvare value 80 Useful Life (years) infinity 20 QI) A Plastic company is Ramallah city is considering the following two mutually exclusive alternatives to replace the existing deteriorated production line. The development department has collected the following data about the available options. i- 10%. (30 marks) Alternative Option A Option B Item year Capital investment cost S12.000 $14,000 Annual Maintenance and $1,000 per year $1.200 per year Operation cost Insurance Cost $250 each two years starting at the end of $350 each three years starting at the end of the 3 the 2 year Income SY $4,500 each year Salvage value 1200 1500 Useful life (years) 8 12 A) TE Y $4000, what is the preferable option using Present wneth analysis (12 marks) B) Find the value of Y that makes option A equivalent to option B. (12 marks) C) Find the capital recovery for option A. (6 marks) Q2) You are working in a consulting company and given the following information regarding a certain investment project as follows: (MARR-10%) (25 marks) Alternative Diesel Item Initial investment $10,000 Net Annual Profit $5.000 Useful life 4 years A) What is the ROR for this project B) Determine the discounted payback period for the project. 03) The following table contains a cash flow series for an investment opportunity(30 marks) Year O 3 5 Net Cash flow +3,000 - 1000 5000 +2000 + 2000 + 2000 (NCE) 1) What is the type of this cash flow (conventional or non-conventional). Do we have single or multiple RoR? (4 marks) 2) If we have multiple rates, remove the multiple rate by using modified rate of return method (MIRR) with i. -9%, and i 12%, or use the conventional method if having single ROR with MARR -6% (12 marks) 3) Is the investment justified or not knowing that MARR -6% (4 marks) 04) Compare between the following ME alternatives using incremental rate of return analysis with MARR-6%: (25) Alternative A B Item Initial Cost 160 120 Benefits/year 20 18 Salvare value 80 Useful Life (years) infinity 20
