# EPP: Calculate a capacity alternative

Question 45: A capacity alternative has an initial cost of $50,000 and cash flow of $20,000 for each of the next four years. If the cost of capital is 5 percent, the net present value of this investment is:

a) greater than $130,000

b) greater than $80,000

c) impossible to calculate, because no interest rate is given

d) less than $30,000

e) impossible to calculate, because variable costs are not known

Question 49: An item's holding cost is 60 cents per week. Each setup costs $120. Lead time is 2 weeks. EPP is:

a).005

b) 60

c) 72

d) 100

e) 200

Please select the right answer and provide explanation as to how you have calculated it.