PS 11 - Different Useful Lives - Repeatability

PS 11 - Different Useful Lives - Repeatability - b Give 2...

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IE 150 Problem Set 11 Different Useful Lives - Repeatability Instructions:  Write/Type/Print your answers on yellow pad or bond paper (NO A4’s). Use a different sheet per  “long” problem. Use phrases  to describe what you are doing. Do not present it as just a series of equations and  numbers.  Label each step. Ex: “Step 1: Set-up the Total Revenue Equation”, “Step 4: Solve for the NPV”.  Box the final answers.  Use clear formatting: Indent at each step. Show your answers in just 1 column. (The problem set  will be read from top to bottom, and not top bottom diagonal right bottom.) Problem 1:  a) Name the two assumptions behind the repeatability assumption?  
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Unformatted text preview: b) Give 2 examples on where the repeatability assumptions may hold. Problem 2: A consulting firm proposed three possible improvements on a dilapidated service facility. The alternatives given ranged from band-aid to long-term solutions wherein the details are summarized in the tables below: A B C Capital Investment 30,000 20,000 50,000 Useful Life 2 3 5 Annual Expenses 1,000 4,000 2,500 Market Value 2,500 10,000 a) Which deal proposal would minimize long term expenses? b) How much discount (to the capital investment cost) should be applied to the losing alternatives so that it would be equally attractive with the best alternative?...
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  • Spring '11
  • J3Patino
  • Capital Investment, long term expenses, total revenue equation, dilapidated service facility., repeatability assumptions

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