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Leviafan [203]
2 years ago
10

An existing electrical power line needs to have its capacity increased, and this can be done in either of two ways. The first me

thod is to add a second conductor to each phase wire using the same poles, insulators and fittings, at a construction cost of $15,000. The second method for increasing capacity is to build a second line parallel to the existing line, using new poles, insulators and fittings, at a construction cost of $23,000. At some time in the future, the line will require another increase in capacity, with the first alternative now requiring a second line at a cost of $32,500, and the second alternative requiring added conductors at a cost of $23,000. If interest rate is 6%, how many years between the initial expenditure and the future expenditure will make the two methods economically equal
Business
1 answer:
nekit [7.7K]2 years ago
3 0

Answer:

3 years

Explanation:

<u>First method</u>

The PV of the investment can be written as:

PV1 = $15,000 + $32,500/(1+0.06)^n

<u>Second method</u>

The PV of the investment can be written as:

PV2 = $23,000 + $23,000/(1+0.06)^n

After n years both projects will be economically equal. Hence their present value must be equal PV1 = PV2

$15,000 + $32,500/(1.06)^n = $23,000 + $23,000/(1.06)^n

$23,000 - $15,000 = $32,500/(1.06)^n - $23,000/(1.06)^n

$8,000 = $9,500/(1.06)^n

(1.06)^n = $9,500/$8,000

(1.06)^n = 1.1875

Taking log on both sides we get:

nlog1.06 = log 1.1875

n = log 1.1875/log 1.06

n = 0.07463361829/0.02530586526

n = 2.94926166417121

n = 3

So, the answer is 3 years

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1 year ago
Assuming that there is one-half pound of resin per foot of the finished product, determine the resin materials cost per foot of
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Given the data in the question;

                                                      <u>May</u>                  <u>June</u>                          <u>July</u>

<u>Resin pounds input </u>

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<u>Conversion costs</u>                    <u>$80,000</u>           <u>$120,000</u>                 <u>$115,000</u>

<u>Conduit output from</u>

<u>the process (feet)</u>                   <u>800,000</u>              <u>1,200,000</u>            <u>1,130,000</u>

Assuming that there is one-half pound of resin per foot of the finished product, determine the resin materials cost per foot of finished product for June.

<u>Given:</u>

Materials cost for June = $640,000

Number of Feet produced as output in June =  1,200,000

   

So, Formula of Material Cost per foot of finished product

Material Cost per foot of finished product = Material Cost/ Number of feet produced in June

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                                                                        = $0.5333 = $0.53

Therefore, the resin materials cost per foot of finished product for June is $0.53

Hence, the correct option is A.

Your question is incomplete, but most probably your full question was:

Rambo-Conduit Corporation manufactures plastic conduit that is used in the cable industry. A conduit is a tube that encircles and protects the underground cable. In the process of making the plastic conduit, called extrusion, the melted plastic (resin) is pressed through a die to form a tube. Scrap is produced in this process. Information from the cost of production reports for three months is as follows, assuming that inventory remains constant:

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Answer:

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