8.

Following is information on two alternative investments being considered by Jolee Company. The company requires a 12% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
  

a. For each alternative project compute the net present value.
b. For each alternative project compute the profitability index. If the company can only select one project, which should it choose?

For each alternative project compute the net present value.

Hearne Company has a number of potential capital investments. Because these projects vary in nature, initial investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used.   

Project 1: Retooling Manufacturing Facility

This project would require an initial investment of $5,550,000. It would generate $991,000 in additional net cash flow each year. The new machinery has a useful life of eight years and a salvage value of $1,168,000.

Project 2: Purchase Patent for New Product

The patent would cost $3,890,000, which would be fully amortized over five years. Production of this product would generate $758,550 additional annual net income for Hearne.

Project 3: Purchase a New Fleet of Delivery Trucks

Hearne could purchase 25 new delivery trucks at a cost of $185,000 each. The fleet would have a useful life of 10 years, and each truck would have a salvage value of $6,400. Purchasing the fleet would allow Hearne to expand its customer territory resulting in $901,900 of additional net income per year.


Required:
1. Determine each project's accounting rate of return. (Round your answers to 2 decimal places.)
Project 1: %

Project 2: %

Project 3: %
       

2. Determine each project's payback period. (Round your answers to 2 decimal places.)

Project 1: Years

Project 2: Years

Project 3: Years
       

3. Using a discount rate of 10 percent, calculate the net present value of each project. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your intermediate calculations to 4 decimal places and final answers to 2 decimal places.)
Project 1:

Project 2:

Project 3:
       

4. Determine the profitability index of each project and prioritize the projects for Hearne. (Round your intermediate calculations to 2 decimal places. Round your final answers to 4 decimal places.)

Project 1: Rank:

Project 2: Rank:

Project 3: Rank:

Hearne Company has a number of potential capital investments. Because these projects vary in nature, initial investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used.   

Project 1: Retooling Manufacturing Facility

This project would require an initial investment of $4,950,000. It would generate $883,000 in additional net cash flow each year. The new machinery has a useful life of eight years and a salvage value of $1,024,000.

Project 2: Purchase Patent for New Product

The patent would cost $3,470,000, which would be fully amortized over five years. Production of this product would generate $468,450 additional annual net income for Hearne.

Project 3: Purchase a New Fleet of Delivery Trucks

Hearne could purchase 25 new delivery trucks at a cost of $125,000 each. The fleet would have a useful life of 10 years, and each truck would have a salvage value of $5,200. Purchasing the fleet would allow Hearne to expand its customer territory resulting in $421,900 of additional net income per year.

1. Determine each project's accounting rate of return. (Round your answers to 2 decimal places.)

2. Determine each project's payback period. (Round your answers to 2 decimal places.)

3. Using a discount rate of 10 percent, calculate the net present value of each project. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your intermediate calculations to 4 decimal places and final answers to 2 decimal places.)

4. Determine the profitability index of each project and prioritize the projects for Hearne. (Round your intermediate calculations to 2 decimal places. Round your final answers to 4 decimal places.)

Hearne Company has a number of potential capital investments. Because these projects vary in nature, initial investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used.   

Project 1: Retooling Manufacturing Facility

This project would require an initial investment of $5,550,000. It would generate $991,000 in additional net cash flow each year. The new machinery has a useful life of eight years and a salvage value of $1,168,000.

Project 2: Purchase Patent for New Product

The patent would cost $3,890,000, which would be fully amortized over five years. Production of this product would generate $758,550 additional annual net income for Hearne.

Project 3: Purchase a New Fleet of Delivery Trucks

Hearne could purchase 25 new delivery trucks at a cost of $185,000 each. The fleet would have a useful life of 10 years, and each truck would have a salvage value of $6,400. Purchasing the fleet would allow Hearne to expand its customer territory resulting in $901,900 of additional net income per year.

Required:
1. Determine each project's accounting rate of return. (Round your answers to 2 decimal places.)

4. Determine the profitability index of each project and prioritize the projects for Hearne. (Round your intermediate calculations to 2 decimal places. Round your final answers to 4 decimal places.)

Hearne Company has a number of potential capital investments. Because these projects vary in nature, initial investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used.   

Project 1: Retooling Manufacturing Facility

This project would require an initial investment of $4,900,000. It would generate $874,000 in additional net cash flow each year. The new machinery has a useful life of eight years and a salvage value of $1,012,000.

Project 2: Purchase Patent for New Product

The patent would cost $3,435,000, which would be fully amortized over five years. Production of this product would generate $446,550 additional annual net income for Hearne.

Project 3: Purchase a New Fleet of Delivery Trucks

Hearne could purchase 25 new delivery trucks at a cost of $120,000 each. The fleet would have a useful life of 10 years, and each truck would have a salvage value of $5,100. Purchasing the fleet would allow Hearne to expand its customer territory resulting in $360,000 of additional net income per year.
Required:
1. Determine each project's accounting rate of return. (Round your answers to 2 decimal places.)

    

2. Determine each project's payback period. (Round your answers to 2 decimal places.)

3. Using a discount rate of 10 percent, calculate the net present value of each project. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your intermediate calculations to 4 decimal places and final answers to 2 decimal places.)

4. Determine the profitability index of each project and prioritize the projects for Hearne. (Round your intermediate calculations to 2 decimal places. Round your final answers to 4 decimal places.)

    

Hearne Company has a number of potential capital investments. Because these projects vary in nature, initial investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used.   

Project 1: Retooling Manufacturing Facility

This project would require an initial investment of $5,550,000. It would generate $991,000 in additional net cash flow each year. The new machinery has a useful life of eight years and a salvage value of $1,168,000.

Project 2: Purchase Patent for New Product

The patent would cost $3,890,000, which would be fully amortized over five years. Production of this product would generate $758,550 additional annual net income for Hearne.

Project 3: Purchase a New Fleet of Delivery Trucks

Hearne could purchase 25 new delivery trucks at a cost of $185,000 each. The fleet would have a useful life of 10 years, and each truck would have a salvage value of $6,400. Purchasing the fleet would allow Hearne to expand its customer territory resulting in $901,900 of additional net income per year.


Required:
1. Determine each project's accounting rate of return. (Round your answers to 2 decimal places.)
Project 1: %

Project 2: %

Project 3: %
       

2. Determine each project's payback period. (Round your answers to 2 decimal places.)

Project 1: Years

Project 2: Years

Project 3: Years
       

3. Using a discount rate of 10 percent, calculate the net present value of each project. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your intermediate calculations to 4 decimal places and final answers to 2 decimal places.)
Project 1:

Project 2:

Project 3:
       

4. Determine the profitability index of each project and prioritize the projects for Hearne. (Round your intermediate calculations to 2 decimal places. Round your final answers to 4 decimal places.)

Project 1: Rank:

Project 2: Rank:

Project 3: Rank:

Hearne Company has a number of potential capital investments. Because these projects vary in nature, initial investment, and time horizon, management is finding it difficult to compare them. Assume straight line depreciation method is used.   


Project 1: Retooling Manufacturing Facility

This project would require an initial investment of $4,850,000. It would generate $865,000 in additional net cash flow each year. The new machinery has a useful life of eight years and a salvage value of $1,000,000.

Project 2: Purchase Patent for New Product

The patent would cost $3,400,000, which would be fully amortized over five years. Production of this product would generate $425,000 additional annual net income for Hearne.

Project 3: Purchase a New Fleet of Delivery Trucks

Hearne could purchase 25 new delivery trucks at a cost of $115,000 each. The fleet would have a useful life of 10 years, and each truck would have a salvage value of $5,000. Purchasing the fleet would allow Hearne to expand its customer territory resulting in $200,000 of additional net income per year.  

Required:
1. Determine each project's accounting rate of return. (Round your answers to 2 decimal places.)

2. Determine each project's payback period. (Round your answers to 2 decimal places.)

    
3. Using a discount rate of 10 percent, calculate the net present value of each project. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your intermediate calculations to 4 decimal places and final answers to 2 decimal places.)

4. Determine the profitability index of each project and prioritize the projects for Hearne. (Round your intermediate calculations to 2 decimal places. Round your final answers to 4 decimal places.)

Consider the following situation:

Two animals are competing for territory. Each animal chooses to be either Aggressive or Passive in this competition, and has the following preferences over the outcomes:

• Each animal would prefer to be Aggressive if the other is Passive: this way they win the competition and gain territory.
• Each animal would prefer to be Passive if the other is Aggressive: this way they lose territory, but they avoid a fight which would leave them injured.
• Regardless of whether an animal is Passive or Aggressive, they would prefer that their rival is Passive: dealing with an Aggressive rival costs energy and time that they could use for finding food.

Refer back to the situation in Question 4.

When modeled using game theory, how would Animal 1's preferences rank the four possible strategy profiles?

Group of answer choices

Most Preferred

      [ Choose ]            Animal 1 is Passive, Animal 2 is Aggressive            Animal 1 is Aggressive, Animal 2 is Aggressive            Animal 1 is Aggressive, Animal 2 is Passive.            Animal 1 is Passive, Animal 2 is Passive.      

2nd Most Preferred

      [ Choose ]            Animal 1 is Passive, Animal 2 is Aggressive            Animal 1 is Aggressive, Animal 2 is Aggressive            Animal 1 is Aggressive, Animal 2 is Passive.            Animal 1 is Passive, Animal 2 is Passive.      

3rd Most Preferred

      [ Choose ]            Animal 1 is Passive, Animal 2 is Aggressive            Animal 1 is Aggressive, Animal 2 is Aggressive            Animal 1 is Aggressive, Animal 2 is Passive.            Animal 1 is Passive, Animal 2 is Passive.      

Least Preferred

      [ Choose ]            Animal 1 is Passive, Animal 2 is Aggressive            Animal 1 is Aggressive, Animal 2 is Aggressive            Animal 1 is Aggressive, Animal 2 is Passive.            Animal 1 is Passive, Animal 2 is Passive.      

Refer back to the situation in Question 4.

When modeled using game theory, how would Animal 2's preferences rank the four possible strategy profiles?

Group of answer choices

Most Preferred

      [ Choose ]            (P, A)            (A, P)            (P, P)            (A, A)      

2nd Most Preferred

      [ Choose ]            (P, A)            (A, P)            (P, P)            (A, A)      

3rd Most Preferred

      [ Choose ]            (P, A)            (A, P)            (P, P)            (A, A)      

Least Preferred

      [ Choose ]            (P, A)            (A, P)            (P, P)            (A, A)      

The researchers suggest that there are occupational differences in mean testosterone level. Medical doctors and university professors are two of the occupational groups for which means and standard deviations are recorded and listed in the following table.

Let us denote:

• μ1:μ1: population mean testosterone among medical doctors,
• μ2:μ2: population mean testosterone among university professors,
• σ1:σ1: population standard deviation of testosterone among medical doctors,
• σ2:σ2: population standard deviation of testosterone among university professors.

Case 1: Assume that the population standard deviations are unequal, i.e. σ1≠σ2σ1≠σ2.
What is the standard error of the difference in sample mean x¯1−x¯2x¯1−x¯2? i.e. s.e.(x¯1−x¯2)=s.e.(x¯1−x¯2)= [answer to 4 decimal places]

Which of the following options gives the formula for 95% confidence interval for μ1−μ2μ1−μ2?
−0.39∓1.86×s.e.(x¯1−x¯2)−0.39∓1.86×s.e.(x¯1−x¯2)
−0.39∓3.36×s.e.(x¯1−x¯2)−0.39∓3.36×s.e.(x¯1−x¯2)
−0.39∓2.9×s.e.(x¯1−x¯2)−0.39∓2.9×s.e.(x¯1−x¯2)
−0.39∓2.31×s.e.(x¯1−x¯2)−0.39∓2.31×s.e.(x¯1−x¯2)
−0.39∓1.4×s.e.(x¯1−x¯2)−0.39∓1.4×s.e.(x¯1−x¯2)

Are there significant difference between mean testosterone levels of medical doctors and university professors?
no, because x¯1=x¯2x¯1=x¯2
yes, because x¯1≠x¯2x¯1≠x¯2
yes, because the entire 95% confidence interval for μ1−μ2μ1−μ2 does not contain 0
no, because the 95% confidence interval for μ1−μ2μ1−μ2 contains 0

Case 2: Now assume that the population standard deviations are equal, i.e. σ1=σ2σ1=σ2.
Compute the pooled standard deviation, spooledspooled [answer to 4 decimal places]

Which of the following options gives the formula for 95% confidence interval for μ1−μ2μ1−μ2 for pooled situation?
−0.39∓1.38×1.8922−0.39∓1.38×1.8922
−0.39∓3.25×1.8922−0.39∓3.25×1.8922
−0.39∓2.26×1.8922−0.39∓2.26×1.8922
−0.39∓1.83×1.8922−0.39∓1.83×1.8922
−0.39∓2.82×1.8922−0.39∓2.82×1.8922

What is the margin of error of the 95% pooled confidence interval of μ1−μ2μ1−μ2? [answer to 4 decimal places]

UPMC Hospital has been under recent pressure from stakeholders to improve cost efficiency and customer service. In response, the hospital calls in the Health Service Administration (HSA) Consulting Team of Robert Morris & Company (RMC). After initial analysis, we (HSA@RMC) decided to target the X-ray service process. We study the X-ray service process to recommend improvements.

We identified the point of entry into the process as the instant that a patient leaves the physician’s office to walk to the X-ray lab. The point of exit is defined as the instant that both the patient and the completed X-ray film are ready to enter the physician’s office for diagnosis. The unit of flow is a patient. We examined the entire process in detail and broke it down into the 11 constituent activities identified as in the table of the next page. Note that a, c and b denote the optimistic time, the most likely time and the pessimistic time. The flow chart is as follows:

1.1 (2 points) The duration of each activity is of Beta Distribution. Note that it is a BETA DISTRIBUTION. Fill in the following table.

1.2 (2 points) There are 4 paths as follows:

            Path 1: Start → 1 → 4 → 5 → 6 → 7 → 8 → 9 → 10 → End

            Path 2: Start → 2 → 3 → 4 → 5 → 6 → 7 → 8 → 9 → 10 → End

            Path 3: Start → 1 → 4 → 5 → 6 → 7 → 8 → 11 → End

            Path 4: Start → 2 → 3 → 4 → 5 → 6 → 7 → 8 → 11 → End

What are the mean and the variance of the duration of each path? What is the longest path in mean time? Fill in the following table and identify the longest path in mean time.

Answer: The longest path in mean time is                                                                .

1.3 (2 points) What is the probability of completing the longest path within 185 minutes? Assume that the duration of the longest path is normally distributed.

Answer:                                                                .

1.4 (2 points) What is the time T for which the probability to complete the longest path is 95%? Assume that the duration of the longest path is normally distributed.