Question
There are two options available for the establishment of a facility. One of these options will be chosen. The information regarding the options is provided
There are two options available for the establishment of a facility. One of these options will be chosen. The information regarding the options is provided in the table next to it. Based on this:
a) Determine which option should be implemented using the Investment Cost Table and the Annual Equivalent Cost (AEC) method.
b) Calculate the present value (PV) of the investment cost for each option.
c) Determine which option should be implemented using the Revenue Table and the Annual Equivalent Revenue (AER) method. d) Determine which option should be implemented using the Annual Equivalent Net Income (AENI) method. e) Prepare a table to find the payback period (PP-2) for the preferred option according to the AENI method. f) Determine the profitable operating period and the time risk of the investment for the preferred option according to the AENI method
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