Purchase Solution

EPP: Calculate a capacity alternative

Not what you're looking for?

Ask Custom Question

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.

Purchase this Solution
Solution Summary

The expert calculates a capacity alternative.

Solution Preview

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 ...

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
Recent Feedback
  • "Your explanation to the answers were very helpful."
  • "What does 1 and 0 means in the repair column?"
  • "Went through all of the formulas, excellent work! This really helped me!"
  • "try others as well please"
  • "Thank you, this helped a lot. I was not sure how to plug in those numbers to a formula. This was a great help. Now I have to figure out how to explain cost of capital is used in net present value analysis, and how cost of capital is used in net present value analysis. This stuff gets confusing."
Purchase this Solution
Free BrainMass Quizzes
Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

View More Free Quizzes
Related BrainMass Solutions

  • Advantages of an EPP

    What are the advantages of an EPP (employee participation program)?

  • Coefficient of variation

    Calculate the coefficient of variation for each alternative Coefficient of variation = Standard deviation/ Expected value Alternative Expected return Standard deviation of return Coefficient of variation A 20%

  • Coefficient of variation and risk

    a) Calculate the coefficient of variation for each alternative. b) If the firm wishes to minimize risk, which alternative do you recommend? Why? See attachment. a. Coefficient of variation(CV) = Standard Deviation/Expected Return b.

  • hypothesis test - bottling machine functioning properly

    State the appropriate null and alternative hypotheses. Ho: M=0.01, i.e. the mean capacity of the bottle is 0.01 liter Ha: M<>0.01, i.e. the mean capacity of the bottle is NOT 0.01 liter b. Calculate the test statistic.

  • Analyzing Production Capacity

    This is a flexible and inexpensive alternative. The should pay one and one half times the normal labor rate to forego the expense of hiring, training, and paying additional benefits.

  • Colton Furniture Company: Theory of Constraints

    Add capacity at the constraint: Add a part time employee for staining 5. Re-design the process - Try different varieties of stains which may require less labor time, finding alternative ways for similar customer usage.

  • CVP calculations

    Sales (4,000 units) $800,000 Less flexible (variable) expenses $200,000 Less capacity-related (fixed) expenses $300,000 In an attempt to improve performance, Jo, the manager is considering a number of alternative actions.

  • Analyzing two expansion alternatives

    Alternative 1: Construct a single plant in Chattanooga, TN. with a monthly production capacity of 250,000 cases, a monthly fixed cost of $265,000 and a variable cost of $45 per case.

  • Multiplant Operation Problem

    A. Assuming a wholesale price of $5 per case, calculate the breakeven output quantities for each alternative. B.

View More Related Solutions