Answer:
C seems the most reasonable
Answer:
Project A
Years Cashflows Discount factor Present values
0 250,000 1 -250,000
1-10 45,100 6.144 277,094.40
Sum of all present value=NPV=27,094.40
IRR (by using trial and error method) = 12.4696%
Note: Discount factor for the year 1-10 is calculated by using annuity formula i.e [1-(1+10%)]/10% = 6.144
Project B
Years Cashflows Discount factor Present values
0 (350,000) 1 (350,000)
1 72,500 0.91 65,975
2 65,500 0.83 54,365
3 73,800 0.75 55,350
4 71,500 0.68 48,620
5 69,800 0.62 43,276
6 75,500 0.56 42,280
7 31,000 0.51 15,810
8 47,500 0.47 22,325
9 55,500 0.42 23,310
10 29,200 0.38 11,096
Sum of all present values=NPV=32,407
IRR(by using trial and error method=12.4186%
On the basis of NPV project B is better because it gives higher NPV than project A. Whereas, Project A is better than project B on the basis of IRR because project A has slightly higher IRR than project B.
b)The conflict between both the investment appraisal technique is likely due to different cash flow patterns of both the project. In such situation decision should be based on NPV because this is an absolute measure
Solution:
Given Information,
Heat input is (
) = 5.5 ×
Btu/h
Combustion efficiency of the boiler (
) = 0.7
Combustion efficiency after turn up (
) = 0.8
Operation Hour (t) = 5200h
Unit cost (c) = 
Calculate heat output from the boiler
=
x 
= 5.5 x
x 0.7
= 3.85 x
Btu/h
Calculate the heat input to the boiler after the tune-up
=
/ 
= 3.85 x
/ 0.8
= 4.8125 x
Btu/h
Calculate the saved energy after the tune-up
=
- 
= 5.5 x
- 4.8125 x
Btu/h
= 0.6875 x
Btu/h
Calculate the annual energy saving (
)
=
x t
= ( 0.6875 x
Btu/h ) ( 5200 hr/yr)
= 3575 x
Btu/h
Calculate the annual cost saving
Annual cost saving =
x Unit cost
= 3575 x
Btu/h x 
= 82225
Answer:
Correct option is C.
15492 is the average ware-house inventory level.
Explanation:
A current warehouse system has five warehouses with 4,000 units at each warehouse. The company desires to change to three warehouses to become more centralized and keep the same customer service levels.
Average warehouse inventory levels =4000*5*(3/5)0.5 =15492