Financial table we’re supposed to use is gievn at the bottom, you dont need to answer 16,19 B. Problems and Questions (White) The Simple Diner Company is analyzing the purchase

Financial table we’re supposed to use is gievn at the bottom, you dont need to answer 16,19 B. Problems and Questions (White)
The Simple Diner Company is analyzing the purchase of a diner in the
west end of the city.
The key parameters of three diners under scrutiny are provided below.
Parameters
Alpha
Beta
Gamma
1. Initial Cost ($)
$425,000
550,000
620,000
$290,000 at
EOY1
$275,000
increasing
$250,000 at EOY1
annually from
annually by 2%
2. Revenues ($)
decreasing
EOY1 to EOY5;
to EOY5;
annually
$280,000
$315,000 at
thereafter by 2%
annually from
EOY6
EOY6 to EOY10
decreasing
annually by 2%
to EOY10
$177,000 at
EOY1
$114,000 at EOY1
increasing
3. Operating
decreasing
$165,000 at
annually by
EOY1 increasing
$1,000 to EOY5;
Costs
annually
annually
$183,000 at
($)
thereafter by
$1,000
thereafter by 1%
EOY6
increasing
annually by 3%
to EOY10
4. End-of-life
salvage value
$-5,000
10,000
($)
5,000
5. Useful life
(years)
5 years
10 years
10 years
All parameter values are fictitious.
.
EOY = End-of-year
Industry Standard = 4 years
MARR = 10%
1.
Alpha’s Net Future Worth (NFW) at EOY5.
2.
Gamma’s Net Present Worth (NPW) at EOYO.
3.
Alpha’s NPW at EOYO. 4.
Beta’s Annual Equivalent Worth (AEW).
5.
Gamma’s AEW over 20 years (it was repeated).
6.
The best of the three (3) diners based on the NFW decision criterion.
7.
The best of the three (3) diners based on the AEW decision criterion.
8.
Beta’s project balance after 2 years based on the simple payback decision
criterion.
9.
Gamma’s project balance after 3 years based on the simple payback
decision criterion.
10.
Gamma’s recovery period (years) based on the discounted payback
decision criterion.
11.
Beta’s project balance after 2 years based on the discounted payback
decision criterion.
12. Alpha’s opportunity cost in the second year based on the simple payback
decision criterion.
13.
The best of the three diners based on the simple payback decision
criterion.
14.
The best of the three diners based on the discounted payback decision
criterion.
15.
Alpha’s benefit/cost (B/C) ratio.
16. Gamma’s (B/C ratio.
17.
Two-part question:
i) Based on the incremental B/C decision criterion, is the Alpha diner
better than the Beta diner?
ii) Does your answer to part i) of this question coincide with your
conclusion as to the better of the Alpha and Beta diners based on the
NEW decision criterion?
Answer options are a) Yes, Yes; b) Yes, No; c) No, Yes; d) No, No.
18.
Two-part question:
i) Based on the incremental B/C decision criterion, is the Beta diner better
than the Gamma diner?
i) Does your answer to part i) of this question coincide with your
conclusion as to the better of the Beta and Gamma diners based on the AEW decision criterion?
Answer options are a) Yes, Yes; b) Yes, No; c) No, Yes; d) No, No.
19.
The best of the three diners based on the B/C ratio.
20.
Alpha’s Internal Rate of Retum (IRR).
21.
The incremental Internal Rate of Return (AIRR) between the Alpha and
Beta diners (based on Excel’s IRR function or equivalent)
22.
The incremental Intemal Rate of Retum (AIRR) between the Alpha and
Gamma diners (based on Excel’s IRR function or equivalent).
23.
Alpha’s External Rate of Return (ERR).
24.
Beta’s ERR.
25.
Two-part question:
i) Based on the incremental ERR decision criterion (based on Excel’s
MIRR function), is the Alpha diner better than the Beta diner?
ii) Does your answer to part i) of this question coincide with your
conclusion as to the better of the Alpha and Beta diners based on the
NPW decision criterion?
Answer options are a) Yes, Yes; b) Yes, No; c) No, Yes; d) No, No.
26.
If the company’s restaurant capital budget was $1.2 million which diner(s)
should it purchase assuming that diners are independent investments?
27.
If the company decided to purchase two diners harvesters instead of one
in 2021 (that is, one in February and the other in July), which of the
harvesters in Question 28 should it purchase in February 2021?
28.
Wilber plans to make six (6) consecutive monthly deposits of $800
beginning on March 31, 2021 to a savings account that pays interest of
12% compounded quarterly.
Which of the following answer options would give the equivalent value
(worth) of his monthly deposits in 2021 on January 1, 2024?
a) NPW=800(P/A,3%,8)(P/F,3%,3)
b) NPW=800(P/A, 12%,8)(P/F,12%,2)
c) NPW=800(P/A,i*%,8)(P/F,i*%,2) [see note below]
d) None of these answers is correct.
[*%=compounded monthly rate equivalent to a rate of 12% compounded
quarterly]

Do you need us to help you on this or any other assignment?


Make an Order Now
0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published.