|
|
|
11ComparisonMethods2PDF.pdf
11ComparisonMethods2PDF.pdf
Showing 31-35 out of 44
11ComparisonMethods2PDF.pdf-Centre for Management ...
11ComparisonMethods2PDF.pdf-Centre for Management of Technology and
11ComparisonMethods2PDF.pdf-Centre ...
11ComparisonMethods2PDF.pdf-Centre for Management of Technology and
Page 31
31
Refinery Budge8ng Example
Page 32
32
Investment Opportuni8es
Refinery Budget/MARR Example
$0
$500K
$1,000K
$1,500K
$2,000K
Cumulative First Cost
0%
40%
30%
20%
10%
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
V
W
X
Y
M is the last one to fit
Fit Q into the gap
Budget
MARR
Unacceptable < MARR
Unacceptable > Budget
The new "Practical" MARR
Page 33
33
Profitability Index
•
Consider 2 proposals:
–
Proposal A: invest $1000 to receive PV of $2,000
•
PW= $2000 $1000 = $1000
•
PI = $2000/$1000 = 2.0
–
Proposal B: invest $1,000,000 to receive PV of
$1,001,000
•
PW = $1,001,000 $1,000,000 = $1000
•
PI = $1,001,000 / $1,000,000 = 1.001
•
PI = PV of Future Cash Flows / Ini8al
Investment
•
If PI > 1.0 then PW > 0
Page 34
34
Problem with IRR
•
Proposal A:
–
Invest $1000
–
Receive $1200 aNer 1 year
–
IRR = 20.0%
•
Proposal B:
–
Invest $950
–
Receive $315 at the end of each year
for 5 years
–
IRR = 18.2%
•
Which is be\er?
Page 35
35
Focus
Project
First Cost
Life
Annual
Benefits
IRR %
PW
EAW
Cumulative
FC
Profitability
Index
Energy Efficiency
B
50,000
20
16,700
33.3%
74,740
10,006
50,000
2.49
Capacity Expansion
A
100,000
15
35,600
35.2%
142,467
20,918
100,000
2.42
Capacity Expansion
D
120,000
15
36,700
30.0%
129,959
19,081
220,000
2.08
Pollution Control
C
75,000
10
26,100
32.8%
72,471
12,826
295,000
1.97
Pollution Control
G
60,000
15
16,900
27.4%
55,104
8,091
355,000
1.92
Energy Efficiency
I
90,000
20
21,500
23.5%
70,593
9,451
445,000
1.78
Lower costs on Product 2
F
50,000
10
15,300
28.0%
36,448
6,451
495,000
1.73
Capacity Expansion
J
120,000
20
27,600
22.6%
86,157
11,535
615,000
1.72
Capacity Expansion
L
130,000
15
29,500
21.5%
70,921
10,413
745,000
1.55
Energy Efficiency
Q
50,000
20
10,000
19.4%
24,694
3,306
795,000
1.49
Pollution Control
K
40,000
10
10,300
22.3%
18,197
3,221
835,000
1.45
Lower costs on Product 1
E
40,000
5
16,000
28.6%
17,676
4,904
875,000
1.44
Pollution Control
P
65,000
15
13,700
19.6%
28,309
4,156
940,000
1.44
Lower costs on Product 5
N
85,000
10
20,500
20.3%
30,830
5,456
1,025,000
1.36
Lower costs on Product 3
H
40,000
5
15,000
25.4%
14,072
3,904
1,065,000
1.35
Capacity Expansion
O
175,000
10
41,600
19.9%
60,049
10,628
1,240,000
1.34
Capacity Expansion
S
100,000
10
22,200
17.9%
25,435
4,502
1,340,000
1.25
Capacity Expansion
V
100,000
10
22,000
17.7%
24,305
4,302
1,440,000
1.24
Pollution Control
T
90,000
15
16,400
16.3%
21,698
3,186
1,530,000
1.24
Lower costs on Product 4
M
60,000
5
20,400
20.8%
13,537
3,755
1,590,000
1.23
Lower costs on Product 6
R
50,000
5
16,200
18.6%
8,397
2,330
1,640,000
1.17
Lower costs on Product 7
U
50,000
10
10,300
15.9%
8,197
1,451
1,690,000
1.16
Lower costs on Product 8
W
80,000
5
23,500
14.4%
4,712
1,307
1,770,000
1.06
Lower costs on Product 9
X
75,000
5
21,600
13.5%
2,863
794
1,845,000
1.04
Capacity Expansion
Y
105,000
10
19,000
12.5%
2,354
417
1,950,000
1.02
MARR = 12%
Ace your assessments! Get Better Grades
Browse thousands of Study Materials & Solutions from your Favorite Schools
University of Toronto Sca...
University_of_Toronto_Scarborough
School:
Econ_Analysis_and_Dec_Making
Course:
Related Topics:
Great resource for chem class. Had all the past labs and assignments
Leland P.
Santa Clara University
Introducing Study Plan
Using AI Tools to Help you understand and remember your course concepts better and faster than any other resource.
Find the best videos to learn every concept in that course from Youtube and Tiktok without searching.
Save All Relavent Videos & Materials and access anytime and anywhere
Prepare Smart and Guarantee better grades
Know more
Students also viewed documents
lab 18.docx
lab_18.docx
Course
Course
3
Module5QuizSTA2023.d...
Module5QuizSTA2023.docx.docx
Course
Course
10
Week 7 Test Math302....
Week_7_Test_Math302.docx.docx
Course
Course
30
Chapter 1 Assigment ...
Chapter_1_Assigment_Questions.docx.docx
Course
Course
5
Week 4 tests.docx.do...
Week_4_tests.docx.docx
Course
Course
23
Week 6 tests.docx.do...
Week_6_tests.docx.docx
Course
Course
106
