Explore BrainMass
Share

quantitative analysis

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Yoshika Landscaping is contemplating purchasing a new ditch-digging machine that promises savings of $5,600 per year for 10 years. The machine costs $21,970, and no salvage value is expected. The company's cost of capital is 12%. You have been asked to advise Yoshika relative to this capital investment decision. As part of your analysis, compute:

1. The payback period.
2. The unadjusted rate of return.
3. The net present value.
4. The internal rate of return.

What factors besides your quantitative analysis should be considered in making this decision?

© BrainMass Inc. brainmass.com October 24, 2018, 9:19 pm ad1c9bdddf
https://brainmass.com/economics/cost-benefit-analysis/quantitative-analysis-123199

Solution Preview

Besides the rate of return, what additional factors should a firm consider in its capital expenditure decisions?

The investment decisions of a firm are generally known as the capital budgeting, or capital expenditure decisions. The firm's investment decisions would generally include expansion, acquisition, modernization and replacement of the long-term assets. Sale of a division or business (divestment) is also as an investment decision.

Decisions like the change in the methods of sales distribution, or an advertisement campaign or research and development programs have long-term implications for the firm's expenditures and benefits, and therefore, they should also be evaluated as investment decisions. Several different procedures are available to analyze potential business investments. Some concepts are better than others when it comes to reliability but all provide enough information ...

Solution Summary

In addition to rate of return, examine other factors of investment.

$2.19
See Also This Related BrainMass Solution

BIOSTATISTICS

2.A group of 25 subjects have their diastolic blood pressures measured. The results, in SPSS are:

|-----------|-------|--------|
|N |Valid |25 |
|-------|--------|
| |Missing|0 |
|-----------|-------|--------|
|Median |85.00 |
|-------------------|--------|
|Mode |82.00 |
|-------------------|--------|
|Minimum |55.00 |
|-------------------|--------|
|Maximum |110.00 |
|-----------|-------|--------|
|Percentiles|25 |71.00 |
| |-------|--------|
| |50 |85.00 |
| |-------|--------|
| |75 |98.00 |
|--------|-------|--------|

Don't worry about values exactly at the endpoints of these intervals. Do the calculations roughly.
(1 point each)

a. What percentage of subjects were from 55 to 85?
b. What percentage of subjects were < 85?
c. What percentage of subjects were from 71 to 85?
d. What percentage of subjects were > 71?
e. What percentage of subjects were > 98?
f. Is there one value more common than the rest, and if so, what is it?

3. Assume you have already been give a Z value. This saves you a step. Consider and determine the following probabilities (1 point each).

A. Pr (-1 < Z < 1)
B. Pr (0 < Z < 1)
C. Pr (Z > 1)
D. Pr (-1 < Z < 0)
E. Pr (Z < -1)
F. Pr (Z > -2)
G. Pr (-1 < Z < 2)

4. Suppose the mean systolic blood pressure in a group of individuals is 150 mmHg, with a standard deviation of 15. Assuming SBP follows a normal distribution in this population, compute (1 point each):

A. Pr (135 < value < 165)
B. Pr (value > 165)
C. Pr (value < 135)
D. Pr (138.75 < value < 161.25)

5 Compute the 5th, 50th, and 95th percentiles of SBP from the previous question. (3 points: 1 each).

In questions 6 - 8, use the 1 and 2 SD rules, without the table.

6.In general, what percentage of a Gaussian data set is within 1 SD of the mean? What percentage is within 2 SD's of the mean? (2 points: 1 each)

7.If the mean grade on an exam was 80, SD = 6, where did about 68% of the grades fall? How about 95%? Assume the grades are Gaussian. (2 points).

8.Consider the following data: 1, 1, 2, 2, 4, 5, 6, 9, 40, 200

Use the 68% and 95% rules to test the normality of these data. (2 points).

9.A researcher studying a subtype of lymphocytes obtains a sample mean of 100 per mL, and a standard deviation of 20, with 25 subjects. Within what interval can you be roughly 68% sure the population mean number of these cells per mL lies? How about 95% sure? (2 points)

10.A researcher has a sample of 500 subjects. The mean is 40, median is 20, range 10-100. (2 points each)

a.Could this researcher calculate a useful interval with 95% probability of containing the population mean (using the mean and SEM)? Explain

b.Could the researcher use the mean and SD to usefully estimate where 95% of the individual subject values were? Explain

c)If there were 10 subjects, would your answers to a and b change?

View Full Posting Details