Module16HWSol - Chapter 10: Drill Problems 2, 3, 5 and...

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Unformatted text preview: Chapter 10: Drill Problems 2, 3, 5 and Application Problems 1, 2, 11. Drill Problems: D2. D3. The initial invest ment is $250, 000. Define as the annual production quantity. Then each annual cash flow is: . To break even, we need the present value to be zero: D5. Break the annual profit as two parts: the steady part and the growing part. The fixed part is: and the growing part is: . Combined with the initial investment at time zero, the present value of the project is computed as: Application Problems: A1. (a) The initial investment on this project is . The annual production capacity is 48 aircrafts. Thus, the annual profit can be computed as: . The present worth is computed as: The break even, the per unit profit is (b) Using the same analysis but replacing . by . To do the sensitivity analysis on the per unit cost, replacing in (a) be , where is the perturbed per unit cost. By perturbing , the following table can be obtained: (c) Similar to the analysis in (a), we should put down the present worth equation: The breakeven profit is per flight. (d) Given these conditions, the per flight profit is: present value is: . The . A2. A11. There is no problem 11. ...
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