Homework 26 Solution

# Homework 26 Solution - Homework 26 Solution 8.4 For the...

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Unformatted text preview: Homework 26 Solution 8.4 For the French plant, the breakeven point is Q FC \$3,500,000 761 hwt r v \$8500 \$3900 For the American plant, the breakeven point is Q 8.6 FC \$2,650,000 1019 hwt r v \$12,500 \$9900 For the French plant, the profit is Profit r v Q FC \$8500 \$3900 950 \$3,500,000 \$870,000 For the American plant, the profit is Profit r v Q FC \$12,500 \$9900 850 \$2,650,000 \$440,000 8.7 For the French plant we can write the profit equation in terms of a variable cost v and set it equal to the \$1,000,000 goal: Profit \$8500 v 950 \$3,500,000 \$1,000,000 \$8500 v 950 \$4,500,000 \$8500 v \$4,500,000 950 \$4737 v \$8500 \$4737 \$3763 per hwt This requires a reduction of \$3900 \$3763 \$137 per hwt or \$3900 \$3763 100% 3.5% \$3900 in the variable costs. For the American plant: Profit \$12,500 v 850 \$2,650,000 \$1,000,000 \$12,500 v 850 \$3,650,000 \$12,500 v \$3,650,000 850 \$4294 v \$12,500 \$4294 \$8206 per hwt This requires a reduction of \$9900 \$8206 \$1694 per hwt or \$9900 \$8206 100% 17.1% \$9900 in the variable costs. 8.11 Brittany needs to determine the initial cost that lets Regency Aircraft earn a return of exactly 8% per year (their MARR). One way to do that is to write an equation for the present worth as a function of the unknown initial cost X, set it equal to zero (which means earning exactly the MARR) and solve for X: 6.7101 0.4632 PW X \$15,000 P | A,8%,10 0.20X P | F,8%,10 0 X \$15,000 6.7101 0.20X 0.4632 X 0.09264X \$100,651 0.90736X \$100,651 X \$110,928 So Regency Aircraft has to keep their initial costs below \$110,928 in order to achieve their 8% MARR. 8.12 Let R represent the revenue in Years 2–8. In Year 1, the net revenue is \$50,000 – \$42,000 = \$8000. In Years 2–8 (a period of 7 years), the net revenue is (R – \$42,000). The present worth equation can be written in terms of the unknown revenue as 4.8684 PW \$150,000 \$8000 1.10 R \$42,000 P | A,10%,7 1.10 \$20,000 1.10 1 1 8 Setting this equal to zero and solving for R: 4.8684 \$150,000 \$8000 1.10 R \$42,000 P | A,10%,8 1.10 \$20,000 1.10 0 1 1 8 4.4258 R \$42,000 \$133,397 R \$42,000 \$30,141 R \$72,141 So the National Potato Cooperative needs to earn at least \$72,141 per year in Years 2–8 to recoup their investment in the deskinning machine with a 10% return. ...
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## This note was uploaded on 12/07/2011 for the course CIVL 4111 taught by Professor Moore,l during the Fall '08 term at U. Memphis.

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