Details of this Paper

Problem 5-2 A project engineer with EnvironCare is assigned to start up a new office in a city......

Description

solution


Question

Question;Problem 5-2A project engineer with EnvironCare is assigned to start up a new office in a city where a 6-yearcontract has been finalized to take and to analyze ozone-level readings. Two lease options areavailable, each with a first cost, annual lease cost, and deposit-return estimates shown below.First cost, $Annual lease cost, $ per yearDeposit return, $Lease term, yearsLocation A-15,000-3,5001,0006Location B-18,000-3,1002,0009a) Determine which leave option should be selected on the basis of a present worthcomparison, if the MARR is 15% per year.b) EnviroCare has a standard practice of evaluating all projects over a 5-year period. If astudy period of 5 years is used and the deposit returns are not expected to change,which location should be selected?c) Which location should be selected over a 6-year study period if the deposit return atlocation B is estimated to be $6,000 after 6 years?*Questions: (I need your help to complete those questions)1. What happened in the problem when you changed the interest rate from 15% to10%, with the least common multiple (18 years)? Did the decision changed? Did thepresent value quantities change? If they are different, why did they change?2. What happened in the problem when you changed the interest rate from 15% to10%, with the time study period of 6 years? Did the decision change? Did thepresent value quantities change? If they are different, why did they change?3. Why is the best location different when using the least common multiple (18years) and the time study period of 6 years?

 

Paper#55385 | Written in 18-Jul-2015

Price : $37
SiteLock