ADDITIONAL PROBLEMS AND FE EXAM REVIEW QUESTIONS. All of the following are examples of public sector projects, except: (a) Bridges (&) Emergency relief (© Prisons @ Oilwells ~ 9.54 All of the following are usually associated with public sector projects except: (@) Funding from taxes ) Profit ' (©) Disbenefits Infinite life 9.55 All of the following would be examples of public Projects except: (a) traffic control system. Dam with irrigation (@_ Mass transit system “56 In a conventional B/C ratio, revenue received by the government from admission to national parks should be: (a) Added to benefits in the numerator (6) Subtracted from benefits in the numerator (©) subtract trom costs in the denominator (d) Added to costs in the denominator 57 Ina conventional B/C ratio: (a Disbenefits and M&O costs are subtracted from benefits. (©) Disbenefits: and costs are added to costs. (@ Disbenefits are added to costs and M&O costs are subtracted from benefits. 9.58 Ina modified BIC rati (@_Disbenefits are putin the denominator. (®) Benefits are subtracted from costs. M&O costs are put in the denominator. 9.59 Tf two mutually exclusive alternatives have B/C ratios of 1.4 and 1.5 for the lower- and higher-cost altematives, respectively, the following is correct:(@) The BIC rio on the increment tetnecn thems eqal 15. The BIC ratio on the increment between thems benec Land 15. ‘The BIC rao oa the increment between ‘hem et thin 1S % © Incline independent series by he BC road th aemtves wee red A. Band C, ‘espe btm incest ate" {ng rely wee cbt for overall BIC 1 (09, and 13, Onde sis of hase sl, you sl (a) Selectonlyaterative A (0). Selctcnlysterative C (@)_ Compre A and Cincremenly ‘A alae as the following csh flows Benefis of $50,000 per year 3° Distenefis of $27,000 per ear etal oso $250,000 i Mé&0 cos of 10.000 per year ene steative as an inte ie and the intrest ‘te 105 per ea, te BIC ras closest @ 0 © os 16 Athenee ate of 108 per year, an aemative vith the following estimates bas modied BC ‘to that core Benefits of $60,000 per year Disbenetis of $29,000 per year “smo otf $20.00 per yar ‘MAO cous of S15 000 per year" 04s ® on (o) 108 1m evauting thee mutually exclasivealleraives by the BC metho, the aleraives are ranked A, Band. respectively, in tems of ceasing cs, snd he following results ae obtained fo the overeat 1.09.44 06. On the basis ofthese esl yous Seca ©) Seeac ()_ Steet Asndc ‘An alertive wit a infite Hife as a BIC ratio ‘€1.5. The alemative has bene of $50,000 per ear and aan! maintenance costs of $10,000 per eae Theft cont he alert a an intrest ate of 10% pr year closest @ 2390 “sumo S28 Gpsaies. ($146,100, Comeffcivenes analysis (CEA) ders from ot ent (BC) analyst: {@) CEA cannot hindle mali altematives CEA cannot andl independent alieraives, (@) CEA ie more time-contming and resouce- ‘Several private coleges chim to have programs tha are Yryeffetve teaching enrollees bow to Become etepeneut, Two programs en fed a program X and program ¥, ave produced ‘and 6 persons pe year, epetively, who were ‘ecngaztd as eneprencurs IF the total cost of ‘he programs is £25.00 and $33,000, respec- ‘ively, the oeemenl contefectvents rao closet 1: ner 268 3 “Te sttement contained in code of eis are ‘ariowy known all ofthe felling except: (a) Canons (© Sundazds ‘Norms (Fe following, the word nor elated to eis i: ‘ae @ue e 1 nag a ef i one S maeance (@Seing on he Back martesADDITIONAL PROBLEMS AND FE EXAM REVIEW QUESTIONS In linear breakeven analysis, ifa company expects 15? AW, = ~23,000(4/P,10%10)+4000(4/F,10%,10) to operate ata point ove the breakeven point, it = 3000 = 3x raneais eee met ‘ ~ AW, = —8,000(4/P,10%,4) ~ 2000 ~ 6 Ub) With the higher fixed cost For these two AW relations, the breakeven point x, the lower variable cost in miles per year, is closest to: ‘With he higher variable cost (@ 1130 @) 1224 5.5) company is considering two altematives to auto- 1590 tate the pH of process liquids, Alternative A. will Kass have fixed costs of $42,000 per year and will re G squire 2 workers at $48 per day each. Together, 15,53 To make an item in-house, equipment costing these workers can generate 100 units of product $250,000 must be purchased. It wll have a life of por day. Alternative B will have fixed costs of ‘years, a smal cost of $80,000, and each uit $56,000 per year, but wit this alternative, 3 work: will cost $40 to manufacture: Buying the item ex- es will generate 200 units of product. Ix is the {erally will cost $100 per uit. ACI = 15% per ‘umber of units per year, the variable cost (VC) in year, its cheaper to make te item in-house ifthe S per year fr altemative Bis represented by: umber per year needed is canner” (2 S099) Be * $6,000 Equal t 2793 units (@) [2(48)/100}x + 42,000 (@) Below 2793 units 15 When the variable cost is reduced for linear total 1336 A at Mercy Hospital has fixed costs of cost and revenue ines, the breakeven point de- 0,00 fer year and variable csts of $50 per est. creases. This isan economic advantage because: eis automated its xed cost wll be (@) The revenve per unit wll netease, $21,500 per yea, ba its variable cost willbe only ‘The two lines will now cross $10 per test. The numberof tests that must be per- formed each year forthe two operations to break is losest to: (d) “TreTaTA cost line becomes not ( (8) 455 (©) 750 (a) Over 800 mlowen Gr = zoo > BY 5 340 Rinm S$ 4“A ‘ihr arn Xo ¥Akeanve Xb ed “tt 810,00 pe Yor wt ble ct S50 pera he purr or a ten Ys ted com ile $500 po or nae aan Vt Be fore op Yt vet ry ret actony ite vr fe my wt of ection ‘eo dia meio er cima Fetwing + ype rn, Mati il et Sonn pr and a 1 yar a al tonne ct wil be $10.0 yr our ore Mr D wil cot $10.00 pore i ist 8 yes At ite ate po ‘or, the a inne onto maa {it wl mae he wo mts the ae (a) Leu han 14.000 ) siizm0 to si9st0 ‘eansnctin company can prc pie af ict or 850.00 and pen $100 pry poring coe The equipment wil aves Sar Ie wih sage ae. leat, he oo puny ca se the apm for $10 py. ‘The sun of days pa othe omy ‘equi the upto jsf prcas at an inst ate ope eaves @ ide (stage @ % Austr hat fit cost 0 40,00, moet op- ring ast of $150, aa salve vale 512000 in 10 yeas. The MARR i 12% per ea, ‘An deta ctor can be ed fo $3200 por moth (operating costo nl). I he nim numberof mons per ear the esse ‘mat be ed in rot pce, the ‘aon on represent by (Ge) A004 /71%10)~ 1000 © fo) “40.004/7.1%10)~ 15000 $F 140004/F.1.4%10) = 32000 ‘An antcorosive costing fora chemical storage “Ml con $5000 and tS years i ouch tank and of 3 yeas a aso SEO. an patite a 62 pa 10 Tepe ca $540 ay pre wet ene by $240 ac year You 909 tive $2.00 sing 20% per yer The mara ye foe, yon have Sy mane, ht Geabeviine 20 or Opry (0) Tem yen " Prose A ti ot 1600p yr a Vii et of M0 por an Fae proce 5 nite acl I aya nt of S128 Ire copays MARR pyar a ‘ut po wlth to aa ths Ie he tes ant proton nf 10 ui pes yar cet (a) Les tan $10000 (i) Six000 i ime 10 The protean othe allowing tin at uty at 26 above beer aa at = $5008 per year ‘aril at per nit = 3200 even por anit = $250 212000 ~ 25012000) — S000 rot= 250 1.6 Twomathds ot wea oti inition cal te ender consicaton Mab involve aig ‘cot of $4000, To ining il as 20 ear: ‘The meterance cont wth sted wl be ‘ier er year Maa oie praying comical at eet $40 per lon. One glon ileal is bth mast pd 4 ines per yet determining the mer of les per ye tnt ould es in reaver he “arable ot for method ie lou SSpermie(). SSpermile (a) Sopermile 1.6 How lng wl you tave oma basies at nn income of $000 per era expenses of ‘Iso pr jer if your ial ive as ‘S04 00 and your MARR i 10% perv? © este ye (yeas‘ADDITION: al ofthe following pes oF eal property previsble exe ‘Warchouses re de- (0) ortebuioes (a ates, ig 6 maton o th TRS west, crt eden dedon ng ES pry met ala Ge llowing rege ens pe (ay The payer mt on he propery. (Be wager mst oe he opery bo an incon pricing ctv (The property must have a determinable use fl feof more than | year, © A machine wih 2 Syear life has a first cost of $20,000 anda $2000 savage value. Is annul op- ‘rating cost is $8000 per year. According to the lasscal sight line method, the deprecation charge in year 2: (a) s2800, fo) $4500) $8300 SA machine with a 10year life is MACRS- depreciated. Te machine has ist cost of $0,000 with «$5000 salvage valu. Its annual operating costs $7000 per year, and d for years 1,2, nd 38 10.00% 1.00%, and 14.40%, respectively. The depreciaion chars in yar inert \@ ss400) @) sr200 (©) $5500 Gd) $5300 ‘coal mine purchase foe $5 milion has enough ‘coal to operat fr 10 years, The annual costs eX- ected to be $200,000 per year. The coal is ‘expected to sell for $150 per ton, with annual pro- duction expected to be 10,000 tons. Coal has depletion percentage rate of 10%. The depletion charge for yar 6 acceding to the percentage do- Pletion method would be closest to (@) $7500 @) $100.00 ($125,000 etn ee (a) $7500 rs AND FE EXAM REVIEW QUESTIONS TAL PROBLEMS AND FE EXAM REVIEW QUESTIONS : On ah 1049 Foran tt as B= sco, tnd» Let dpe ie eg ‘ean afer tcatng ein at sede 0% one ae “ af leon, a ee So (@) $58,700 ow ($53,900 1650 Amastt hat was depreciated overa Sea bythe MACRSmethohada BVeiSSoios een, dof year}. I'he MACRS dptaion ate og yea 1, 2,and3, were 020,052 and O05 Speci, the bis fhe ase wa cost © sishono © siss.o00 Ba 35 vv 16.51 A lumber company purchased a tract of land for $70.000 at cone an ints 50 be (see Tae va oe and vas Stated $20,000 nthe it year oops, ee conpay cat dow SOD tee Acting he os pet etd ie deltan er dear close aan S200) srapo EET ( st4m0 So 10.2 Am ase wh ist ust of $500 ada itd saage Yale of $10.00 i depres theMACRS meio. 1 ok valent ent Sears 21,850 an 8 ht ae 25850 the al amit of eesti as the asl pt iin close: (a) sings) ga. s2ias0 (6) 325850 10051 Under the General Depreciation System (GDS) of asc lication, ny asst at noi a tad ‘Gass automatically signed a recvery period of (@) Syews fo) Wyear 15 yeas Jost Alf of the towing stems about the Aer dive Depreciation Ste (ADS) are tru eX (a) Thehal-year convention applies i) Salvage vale is opted Ones enacts au on cet