Financial Analysis

Financial Analysis: Assignment # 01

Financial Analysis: Assignment # 01

Question # 01

If i = 8%, then what is the PW of the deal to you?

Interest Rate

8%

Future Value

$ 20,000.00

Number of Years

20

PV or PW

($196,362.95)

If i = 2% per quarter then what is the PW of the deal to you ?

i

2%

Future Value

$ 20,000.00

Number of Years

20

PV

($327,028.67)

Question # 02

Economic Life may be defined as the productive life of an asset, project etc. The project concept is widely used, too, perhaps, with different meanings in subjects and areas as different as can be administration, engineering, economics, public law and science social. Each area attributed a different meaning it difficult to understand the term in a uniform way on all those who at some point we employ them. In this way it is used both to describe activities of a noun, mainly concrete physical units, civil works or plants industrial, to denote social, public health, education or similar. In this sense, expressions such as: Project Agriculture, Project Engineering, Project Investment, Transport Project Urban Life Project, Bill, Etc. The project definition: A unit of investment to build capacity producing goods or services, consistent from a technical and economic and can develop independently of other investments. It is an example of the interpretation of projects sense of investment project similar to the World Bank and the institutions under the United Nations Organization to assess development projects.

Economic Life Calculator using MARR=10%

<-- Purchase Price

10.00%

<-- MARR

End of Yr

Salvage

AE(i) O&M

Total AE(i)

1

 

$10,000

60000

<- Econ Life

2

 

$40,000

 

3

 

$70,000

 

Economic Life when there is a salvage value

End of Yr

Salvage

CR(i)

O & M

PW(i) O&M

Sum PW(i)'s

AE(i) O&M

Total AE(i)

1

$30,000

$50,000

$10,000

9091

9091

10000

60000.00

2

$20,000

 

$10,000

8264

17355

10000

 

3

0

 

$10,000

7513

24869

10000

 

Question # 03

LCC Calculation of Model B

Data Available

Purchase Price

$23,000

Life Expectancy

4 years

Resale Value

$13,000

Maintenance

$1,100 per year

Operational Cost (gas etc)

$90 per month

Car insurance

$1,400 per year

Mean time between failures

14 months

Repair lost per failure

$650

Description

LCC Cost Model

Purchase Price

$23,000

Resale Value

$13,000

Total Maintenance Cost

4400.00

Total Car Insurance Cost

5600.00

Total Operational Cost

4320.00

Total Repair Cost

2228.57

LCC

$19,451

So Model A is better because its cost is only $500, while model B life cycle cost is about $1900.

Develop a general model that can be used to calculate the LCC for a car

When it comes to developing model for the calculation of Life cycle cost, there is no rocket science for it. It is obvious that the LCC evaluation is important when choosing the equipment, but it must be tailored to the type of equipment and application. This is not a quick comparison that can be used during a negotiation framework or submission process. You must first make sure you measure the current LCC and you do not just create comparative figures do not reflect the true cost of operating the equipment.

Calculating LCC traditional, if not used properly, can also penalize many theoretical concepts that have proven to significantly reduce operating costs and yield losses resulting from wear. For modeling the benefits of LCC, users must consider all costs, including operating costs, the cost of blockages and increased energy costs resulting from wear (yield ...