A new grain combine with a 20 year life can remove seven pounds of rocks from...

A new grain combine with a 20 year life can remove seven pounds of rocks from its harvest per hour. Any rocks left in the its output hopper will cause $35,000 damage in subsequent processes. Several investments are available to increase the rock-removal capacity, as listed in the table below. If the effective annual rate of return is 8%, what should be done? Note that the $35,000 damage is on an annual basis. For example, if nothing is done (1^st option), then there is a 20% chance of incurring $35,000 of damage each year.

Rock Removal Rate (RRR)	Probability of exceeding RRR	Required Investment
7 lb/hr	0.20	$0
8 lb/hr	0.10	$12,000
9 lb/hr	0.05	$18,000
10 lb/hr	0.025	$25,000

Expert Solution


	A	B=A*$35000	C=7000-B
OPTION	Probability of exceeding RRR	Expected annual damage	Annual Savings in damages	Present Value (PV)of Savings	(Using PV function of excel with Rate=8%, Nper=20, PMT=-C(annual savings)
Option 1	0.2	$ 7,000	$0	$0
Option 2	0.1	$ 3,500	$ 3,500	$34,364
Option 3	0.05	$ 1,750	$ 5,250	$51,545
Option 4	0.025	$ 875	$ 6,125	$60,136


OPTION	Present Value (PV)of Savings	Initial Cash flow	Net Present Value
Option 1	$0	$0	$0
Option 2	$34,364	($12,000)	$22,364
Option 3	$51,545	($18,000)	$33,545
Option 4	$60,136	($25,000)	$35,136

Option 4 should be selected with investment of $25,000

jeff jeffy answered 2 years ago

Write a Java Program that can: Remove a particular element from an array. Add a new...

Write a Java Program that can: Remove a particular element from an array. Add a new element to an array. Change an element with the new one. Search for a particular element in the array. The code must have four separate methods for each task stated above. Do not use any pre-defined Java functions. You are free to use int or String data-type for the array.

The family of a patient about to remove the patient from life support. What would be...

The family of a patient about to remove the patient from life support. What would be appropriate interventions ?

A) We are evaluating a project that costs $111518, has a seven-year life, and has no...

A) We are evaluating a project that costs $111518, has a seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 4266 units per year. Price per unit is $51, variable cost per unit is $24, and fixed costs are $83124 per year. The tax rate is 39 percent, and we require a 13 percent return on this project. Suppose the projections given for price, quantity,...

A) We are evaluating a project that costs $115571, has a seven-year life, and has no...

A) We are evaluating a project that costs $115571, has a seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 4293 units per year. Price per unit is $45, variable cost per unit is $25, and fixed costs are $81427 per year. The tax rate is 35 percent, and we require a 8 percent return on this project. Suppose the projections given for price, quantity,...

An American worker can produce either 5 cars or 9 tons of grain a year. A...

An American worker can produce either 5 cars or 9 tons of grain a year. A Japanese worker can produce either 3 cars or 9 tons of grain a year. To keep things simple, assume that each country has 100 million workers. Complete the following table with the number of workers needed to make one car or 1 ton of grain in the United States and Japan. Workers Needed to Make 1 Car 1 Ton of Grain United States 1/5...

An American worker can produce either 5 cars or 8 tons of grain a year. A...

An American worker can produce either 5 cars or 8 tons of grain a year. A Japanese worker can produce either 4 cars or 9 tons of grain a year. To keep things simple, assume that each country has 100 million workers. Complete the following table with the number of workers needed to make one car or 1 ton of grain in the United States and Japan. Workers Needed to Make 1 Car 1 Ton of Grain United States Japan...

Life Insurance:A life insurance company sells a$250,000 1-year term life policy to a 20-year-old...

Life Insurance:A life insurance company sells a $250,000 1-year term life policy to a 20-year-old male for $350. According to the National Vital Statistics Report, the probability that the male survives the year is 0.998734.Please answer all questions and do not hand write your answers. Show your work or please leave the question for someone who can. Thank youa)Compute the expected value.b)Interpret the expected value of this policy to the insurance company.

We are evaluating a project that costs $118,894, has a seven-year life, and has no salvage...

We are evaluating a project that costs $118,894, has a seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 4,101 units per year. Price per unit is $47, variable cost per unit is $30, and fixed costs are $82,846 per year. The tax rate is 36 percent, and we require a 12 percent return on this project. Suppose the projections given for price, quantity, variable...

We are evaluating a project that costs $104,299, has a seven-year life, and has no salvage...

We are evaluating a project that costs $104,299, has a seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 4,235 units per year. Price per unit is $50, variable cost per unit is $30, and fixed costs are $81,714 per year. The tax rate is 36 percent, and we require a 9 percent return on this project. Suppose the projections given for price, quantity, variable...

We are evaluating a project that costs $827,000, has an seven-year life, and has no salvage...

We are evaluating a project that costs $827,000, has an seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 103,000 units per year. Price per unit is $35, variable cost per unit is $22, and fixed costs are $831,135 per year. The tax rate is 38 percent, and we require a 16 percent return on this project. The projections given for price, quantity, variable costs,...

Question