ass13_due112508

# ass13_due112508 - The salvage varies as a percentage of the...

This preview shows pages 1–4. Sign up to view the full content.

ISE460 Fall 2008 Session 26 11/20/08 Assignment 13 Due 11/25/08 No.1 Set up the spreadsheet for Example12.1 and calculate the NPV. Use the simulation example in the demo file for chapter 12 as a template to do this problem Add inflation rate for overall inflation, separate inflation rates for unit variable cost, and fixed cost. Your estimate for the inflation rate is between 4% and 7%, uniformly distributed. The inflation rate for unit variable cost is 75% of the general inflation rate, while fixed costs rise at 50% the inflation rate. The initial values are assumed to be in year 0. The average and standard deviation of the price are \$50 and \$3, with maxima and minima of 41 and 60. Assume that the average demand is a function of your price. Demand = 2200 – 40*(price – 45). The standard deviation of demand is 150. Set maxima and minima of 2500 and 1500.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: The salvage varies as a percentage of the original investment and has a normal distribution with mean 25% and standard deviation of 5%. The inflation rate for it is the same as the general inflation rate. 2 1/2 point for setting this up, 1/2 point for each answer below. Describe how you obtained each. Given an MARR of 20%: a) Determine the probability of a positive net present value, using at least 200 samples. b) What would you negotiate as your unit price as, so to be 75% sure that you achieved a positive net present value at 20% MARR? (to the nearest dollar) Continued on pages 2 through 5 ISE460 Fall 2008 Session 26 11/20/08 Assignment 13 No. 3 (4 1/2 points) ISE460 Fall 2008 Session 26 11/20/08 Assignment 13 ISE460 Fall 2008 Session 26 11/20/08 Assignment 13 c) would your recommendation change if the MARR was 20%?...
View Full Document

## This note was uploaded on 01/20/2009 for the course ISE 460 taught by Professor Bottlik during the Fall '06 term at USC.

### Page1 / 4

ass13_due112508 - The salvage varies as a percentage of the...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online