CE 3361 ANNUALWORTH ECONOMIC ANALYSIS ON THE IMPREGILLO OPTION


CE 3361                                                                      NAME:____________________

PROJECT III                                                              DATE:_____________________

SHOW ALL WORK AND CALCULATIONS

DUE: 19 APRIL 2016

 

GROUP B: IMPREGILLO COMPANY

 

IN ORDER TO COMPARE THE BIDS BY CATERPILLER AND IMPREGILLO, KIEWIT HAS ASKED ITS STAFF TO CARRYOUT AN ECONOMIC STUDY BASED IN PRESENT WORTH, ANNUAL WORTH AND PAYBACK PERIOD ANALYSES.  IT IS YOUR RESPONSIBILITY TO PERFORM THE ECONOMIC ANALYSIS ONLY ON YOUR ASSIGNED ALTERNATIVE: IN THIS CASE IMPREGILLO.  USE THE TABLES PROVIDED IN THIS ASSIGNMENT. NO OTHER SUBMISSIONS WILL BE ACCEPTED.  THE FOLLOWING COST/REVENUE SCHEDULE HAS BEEN DEVELOPED FOR THE IMPREGILLO OPTION BY OUR ACCOUNTANT:

 

IMPERGILLO

 

INITIAL                                                   $600,000

COST

 

DELIVERY                                                 $15,000

COST

 

OPERATION/                                          $3000/YR

MAINTANENCE

 

UPGRADE/                                              $1000 EVERY 2TH

PARTS                                                        YEAR

 

INSURANCE                                                 $600/YR

 

FIRST YEAR INCOME                          $120000/YR

INCOME INCREASE                            $20,000/YR

 

SALVAGE                                                  $120000

 

LIFE                                                              4 YR

 

INTEREST

 

COST                                      2%/QUARTER CP MONTHLY

REVENUE                                                3%/YR

-2-

CE 3361                                                                   NAME:____________________

PROJECT III                                                           DATE:_____________________

SHOW ALL WORK AND CALCULATIONS

 

  1. PERFORM A PRESENT WORTH ECONOMIC ANALYSIS ON IMPREGILLO OPTION: FILL IN TABLES NEATLY

 

IMPREGILLO OPTION

 

PRESENT WORTH: PW                                                                  i  =  8.300%/YR

COST                                                                                                n = 0 TO 12 YEARS

 

 ELEMENT TIME            P/F            P/A AMOUNT     SOURCE
   -$600,000      1.0000  -$600.000        Eq.
   -$  15,000    0
   -$600,000
   -$ 15,000      0.72692  -$  10,904        Eq.
   -$600,000
   -$ 15,000
   -$   1,000
   -$   1,000              – -$      727
   -$   1,000   6
   -$   1,000      0.52841
   -$   1,000
   -$   1,000             –
   -$   3,000           –
   -$      600  12           –
      TOTAL

 

 

    TIME    (1 + i)n   1/(1 + i)n (1 + i)n – 1   i  ∙   (1 + i)n       P/F     P/A
        2
        4
        6
        8
       10
       12

 

 

 

 

 

 

 

 

-3-

 

CE 3361                                                                      NAME:____________________

PROJECT III                                                              DATE:_____________________

SHOW ALL WORK AND CALCULATIONS

 

IMPREGILLO OPTION

 

PRESENT WORTH: PW                                                                i  =  3%/YR

n = 4 TO 12 YEARS

REVENUE

 

  ELEMENT TIME       P/A       P/G      P/F    AMOUNT   SOURCE
   $120,000    12         – $1,194,480   TABLE 8
   $  20,000   51.2482
   $120,000            –   0.8885
   $120,000      8
   $120,000
  TOTAL

 

 

 

DETERMINE NET PRESENT WORTH:

 

REVENUE:______________

COST:      _______________

NET PW:_________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-4-

CE 3361                                                                      NAME:____________________

PROJECT III                                                              DATE:_____________________

SHOW ALL WORK AND CALCULATIONS

 

  1. PERFORM AN ANNUALWORTH ECONOMIC ANALYSIS ON THE IMPREGILLO OPTION: FILL IN TABLES NEATLY

 

IMPREGILLO OPTION

 

ANNUAL WORTH: AW                                                                  i  =  8.300%/YR

COST                                                                                                n =  12 YEARS

 

 ELEMENT     N         PW           A/P  AMOUNT     SOURCE
   -$600,000   12    -$600,000   -$80,854        Eq.
   -$  15,000
   -$600,000      0.134764
   -$ 15,000   12   -$   10,904        Eq.
   -$600,000
   -$ 15,000
   -$   1,000
   -$   1,000 -$        98
   -$   1,000     0.134764
   -$   1,000
   -$   1,000
   -$   1,000
   -$   3,000 -$     3000
   -$      600  12
      TOTAL

 

 

 

    TIME    (1 + i)n (1 + i)n – 1   i  ∙   (1 + i)n     A/P
       12

 

 

 

 

 

 

 

 

 

 

 

 

-5-

 

CE 3361                                                                      NAME:____________________

PROJECT III                                                              DATE:_____________________

SHOW ALL WORK AND CALCULATIONS

 

IMPREGILLO OPTION

 

ANNUAL WORTH: AW                                                                i  =  3%/YR

n = 12 YEARS

REVENUE

 

  ELEMENT     n       PW      A/P    AMOUNT   SOURCE
   $120,000    12   $120,000
   $  20,000   TABLE 8
   $120,000   0.10046
   $120,000    12
   $120,000
  TOTAL

 

 

 

DETERMINE NET ANNUAL WORTH:

 

REVENUE:___________

COST:_______________

NET:_________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-6-

CE 3361                                                                      NAME:____________________

PROJECT III                                                              DATE:_____________________

SHOW ALL WORK AND CALCULATIONS

 

  1. GIVEN THE FOLLOWING ANNUAL WORTH FOR ONE LIFE CYCLE. DETERMINE THE PAYBACK PERIOD OF THE IMPREGILLO OPTION FOR A 0% RATE OF RETURN:

 

IMPREGILLO OPTION

 

 

ANNUAL WORTH: AW                                                                  i  =  8.300%/YR

COST                                                                                                n =  4 YEARS

 

 ELEMENT    n AMOUNT     SOURCE
   -$600,000    4   -$182,364        Eq.
   -$  15,000    4   -$   4,559        Eq.
   -$   1,000    4   -$     259        Eq.
   -$   1,000    4   -$     221        Eq.
   -$   3,000    4   -$   3,000        Eq.
   -$      600    4   -$     600        Eq.

 

 

 

                                                                                                                                                              

REVENUE                                                                                      i =  3%/YR

n =   4 YEARS

 

 

 

 

  ELEMENT     n    AMOUNT     SOURCE
   $120,000     4     $120,000    TABLE 8
   $  20,000     4     $  29,261    TABLE 8
   $120,000     4     $  28,684    TABLE 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-7-

CE 3361                                                                      NAME:____________________

PROJECT III

SHOW ALL WORK AND CALCULATIONS

 

 

PAYBACK PERIOD CALCULATION: nP

SHOW CALCULATIONS

 

COST                                                                     REVENUE

 

 

 

 

 

 

 

AW NCF

AWREVENUE                = ___________

AWCOST                        = ___________

AW NET CASH FLOW = ___________

 

 

 

nP = ________________

 

 

DOES THE IMPREGILLO OPTION PAYBACK PERIOD EXCEED WITHIN

THE USEFUL LIFE OF DRILL: CHOOSE ALL CORRECT ANSWERS

 

 

YES                                                      NO

 

 

ONLY AFTER                                     NOT IMPORTANT

SALVAGE

 

 

NAME _____________________________________

 

 

SIGNATURE:_______________________________

 

 

BY SIGNING THIS PAGE, I CERTIFY THAT I HAVE NOT GIVEN

OR RECEIVED HELP FROM ANY OTHER STUDENT

 

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